Speaker 1: Welcome, Welcome, Welcome back to the Bob left Sets Podcast.
Speaker 1: My guest today is business expert extraordinaire, the one and
Speaker 1: only Seth Godin. Seth, good to have you on the podcast.
Speaker 2: It's a treat I never thought it would happen, and
Speaker 2: I never asked. And I've just been sitting here thinking Lefsets,
Speaker 2: who has so generously chronicled the oral histories of so
Speaker 2: many people who changed my life, my childhood, my young adulthood.
Speaker 2: What I have impostered syndrome. I'm not sure why I
Speaker 2: am here.
Speaker 1: I'm not sure how to respond to that, So I'm
Speaker 1: gonna jump right into the questioning. Okay, we just had
Speaker 1: a presidential election. What did we learn about marketing in
Speaker 1: this election? Let me just sort of set the landscape.
Speaker 1: Traditionally it was a ground game, it was network TV.
Speaker 1: There's a campaign where we saw the power of podcast.
Speaker 1: What's your insight in terms of the selling of the candidates.
Speaker 2: I think most people don't understand what marketing is. It's
Speaker 2: not advertising or hype or hustle. It's not a logo.
Speaker 2: It's this ephemeral, ephemeral story that doesn't easily have words
Speaker 2: on it that we consume, and then we attach a
Speaker 2: narrative to it. So I don't chime in about the
Speaker 2: horse race of politics because it's a distraction and.
Speaker 3: It's designed to divide us.
Speaker 2: But I think we can learn a lot about which
Speaker 2: stories resonate and why they resonate. And lots of people
Speaker 2: in the music business understand intuitively that they're storytellers, but
Speaker 2: they can't find words for it and figure out how
Speaker 2: to put the words on it so that we can
Speaker 2: tell a better story. Time to get back to what
Speaker 2: people really want, which is affiliation, status, belonging, freedom from fear,
Speaker 2: and believing that they were right all along. When those
Speaker 2: things kick in, the story sticks and the words are secondary.
Speaker 1: Okay, how important is the marketing relative to the quality
Speaker 1: of the product itself.
Speaker 2: The marketing is the product itself, So let's dissect that.
Speaker 2: Quality has nothing to do with luxury or goodness or
Speaker 2: whether you like it or not. Quality is whether it
Speaker 2: meets speck. And so art has problems with quality because
Speaker 2: there is no speck for a perfect Joni Mitchell song.
Speaker 2: There is no speck for how do we create this
Speaker 2: resonant story, because the second time we do it is
Speaker 2: not art anymore. The second time we do it, we're
Speaker 2: just a little bit more in tune. But back to
Speaker 2: your original point, marketing that story that resonates with people,
Speaker 2: we will make up all sorts of facts about its
Speaker 2: quality to justify the fact that the story resonated with us.
Speaker 2: So simple example, Saint poly Girl beer Beck's Light, Which
Speaker 2: one do you like better?
Speaker 1: Bob Well, I no longer drink, but when I did drink,
Speaker 1: I liked Becks better.
Speaker 2: But okay, it's exactly the same beer, made on exactly
Speaker 2: the same assembly line, put into slightly different bottles. And
Speaker 2: that's because the story of Saint Pauly Girls fraternity brothers
Speaker 2: and the story of Beck's Light is yuppies, and they
Speaker 2: told different stories, and people would argue about this, just
Speaker 2: like in a double blind study you can't tell the
Speaker 2: difference blindfolded between a Ford and a Chevy truck. But
Speaker 2: they're Ford people and they're Chevy people. Because the story
Speaker 2: is about identity. There is identity in being a Stones
Speaker 2: fan instead a Beatles fan, and vice versa. And it's
Speaker 2: this need that we have to live a life before
Speaker 2: we die, to be part of something, to not be alone.
Speaker 2: That's identity. And then identity can express itself through music,
Speaker 2: and if you hear the song over and over and
Speaker 2: over and over and over again, growing up becomes part
Speaker 2: of your identity. It's not because it's quality, it's because
Speaker 2: of who you are.
Speaker 1: Okay, just to stay on that same theme, something has longevity, because.
Speaker 2: So what did I buy when I bought a one
Speaker 2: hit wonder top forty song that I was totally into
Speaker 2: for a week? What I bought was it was going
Speaker 2: to be replaced next week by a new one. That's
Speaker 2: what teeny boppers do. What did I buy when I
Speaker 2: became a Bruce Springsteen fan for life and pay six
Speaker 2: hundred bucks to go see him? I bought the tribe.
Speaker 2: I bought the circle of people that I identified with.
Speaker 2: They're different products, and there have been people in the
Speaker 2: music industry have been churning out the first one forever
Speaker 2: and the second one we sort of back into. But
Speaker 2: every once in a while a musician works hard to
Speaker 2: build that arc to say, you know, I'm not sure
Speaker 2: when the Warlocks decided that The Grateful Dead was going
Speaker 2: to become a lifestyle, but it's pretty clear after a
Speaker 2: couple of records that that's what they were committing to,
Speaker 2: that they were making music for the family, not eagerly
Speaker 2: trying to find new listeners.
Speaker 1: Okay, if you started in the late sixties and the
Speaker 1: sixties when the Warlocks turned to the Grateful Dead, everything
Speaker 1: happened much more slowly. We hit the MTV era, where,
Speaker 1: you know, in aligned with their logo of the rocket ship,
Speaker 1: you could literally go from zero to hero overnight. But
Speaker 1: it's well established that the faster you went up, the
Speaker 1: faster you came down. So what can we say about
Speaker 1: that ascension?
Speaker 2: That's interesting. I was listening to your Dire Straits podcasts
Speaker 2: a couple of weeks ago, and I'm not sure that
Speaker 2: the evidence backs that up. I think that one of
Speaker 2: the breakthroughs that happened for Dire Straits was MTV, and
Speaker 2: yet today they're still part of the fabric of a
Speaker 2: whole generation of people. One of the things that happens
Speaker 2: when you get programmed because you buy your way or
Speaker 2: luck your way into the top forty is by its nature,
Speaker 2: most of the top forty is disposable. But then that's
Speaker 2: part of the reason Billboard had to invent a new chart.
Speaker 2: Because those other people who were selling and selling and
Speaker 2: selling and selling and selling, they were important in the
Speaker 2: music industry, but they weren't the hit of the day.
Speaker 2: I don't know if that makes any sense.
Speaker 3: You know way more about this thing.
Speaker 1: No it does. I mean the case is the dire straits.
Speaker 1: I don't want to get into the weeds, and that
Speaker 1: most of their success was prior to the MTV era,
Speaker 1: and then they blew up in the MTV era. I
Speaker 1: don't want to, you know, split hairs here. But the
Speaker 1: question is can I'll put it a different way. A
Speaker 1: member of another band they said, we're afraid of having
Speaker 1: a hit. This is in the modern era, it will
Speaker 1: destroy our career. Yep, we're as it is so hard
Speaker 1: to be recognized at all. And he was taking advice
Speaker 1: from older acts who'd already had hits.
Speaker 3: Yeah.
Speaker 1: So you know, when you have this level of success,
Speaker 1: you can't really plan it a lot of times anyway.
Speaker 1: But I think today, to have some level of ubiquity
Speaker 1: can only be a good thing.
Speaker 2: No, no, it cannot only be a good thing. The
Speaker 2: system wants to chew you up and spit you out.
Speaker 2: I think it's worth asking the musician, what's this for?
Speaker 2: This journey you're on? Why are you here? What are
Speaker 2: you doing it for? If you're doing it to make
Speaker 2: as much money as possible. You didn't pick a great
Speaker 2: industry to do that. Because someone's going to win the lottery,
Speaker 2: it's probably not going to be you. If you did
Speaker 2: it to have this craft, you know. I'm a huge
Speaker 2: fan of Patricia Barber. I was lucky enough to sort
Speaker 2: of produce at an executive level one of her records.
Speaker 3: But I've known her for a while.
Speaker 2: Patricia Barber plays beautiful jazz piano, and first it was
Speaker 2: at the Green Mill. Now it's at a different club
Speaker 2: in Chicago. They basically turned the clobe over to her
Speaker 2: once a week. The rest of the time, if she
Speaker 2: wants to, she can sell out a pretty big jazz
Speaker 2: club in New York if she wants to go on
Speaker 2: the road. But once a week she shows up. That's
Speaker 2: her living room and I'm talking to her and I said,
Speaker 2: you've got that one song that gets everyone out of
Speaker 2: their seats, that sits in the in the beautiful overlap
Speaker 2: between jazz and pop. But most of the songs you're
Speaker 2: playing are calmer than that, more melodic than that. Need
Speaker 2: more insight than that.
Speaker 3: What are you doing?
Speaker 2: What's the goal here? And she said, my goal isn't
Speaker 2: to sell records, right. My goal isn't to be famous.
Speaker 2: My goal is to create the conditions for this music,
Speaker 2: for this music to reach people. And if there's only
Speaker 2: two hundred people in the room and she can do
Speaker 2: it again next week, that's fine. So the trick that
Speaker 2: social media and media before that has pushed on creators
Speaker 2: is this, you know, it doesn't matter what you say
Speaker 2: as long as you're famous and they spell your name right.
Speaker 2: I think that's ridiculous. I think that makes the executives
Speaker 2: at the record label happy, but I don't think that's
Speaker 2: how you build the career you want to have.
Speaker 1: So what comes first? You're in your bedroom, there's a
Speaker 1: belief in yourself or is it the ta years of
Speaker 1: music lessons? Or is it the people? You know? What's
Speaker 1: the germination of this career?
Speaker 2: So Dave Grohl wrote a book in which he argued
Speaker 2: that it's what your mother did when you were eleven,
Speaker 2: and he interviewed all these rock and roll moms, and
Speaker 2: you know, we're all living in a high school for
Speaker 2: the rest of our lives. High school does something to us.
Speaker 2: And for pop music, it's from the stories I'm hearing.
Speaker 2: It's often what happened in high school? How did that
Speaker 2: help you find an identity? And then by hook er
Speaker 2: by crook, who did you become? And so if we
Speaker 2: think about someone like David Bowie, or we think about
Speaker 2: other musicians who we think we know what they sound like,
Speaker 2: and then you listen to their early music, they didn't
Speaker 2: sound like that, right that.
Speaker 3: What happened was.
Speaker 2: They became whatever they needed to become to do their
Speaker 2: music for the people they wanted to do their music for.
Speaker 2: And that experimentation and exploration is driven by an unsatiable desire,
Speaker 2: an empty hole that a certain kind of musician is
Speaker 2: trying to fill. Sometimes they get fortunate and it happens
Speaker 2: right when they needed to happen. Sometimes it happened sooner
Speaker 2: than they needed to happen. I think Ricky Lee Jones,
Speaker 2: it happened sooner than she was ready for it. But
Speaker 2: when you watch what Ricky Lee Jones has done since
Speaker 2: she blew up with a couple of records, is she
Speaker 2: doesn't care how big the venue is. She wants to
Speaker 2: play her music her way for the people she's playing
Speaker 2: it for, to share the noise in her head with
Speaker 2: other people. So I'm mixing together a bunch of ideas
Speaker 2: about creativity here. But I don't think these people.
Speaker 3: Were talking about are born that way? Really confident that
Speaker 3: they are made, not born.
Speaker 1: Okay, you're not born that way. What is the biggest
Speaker 1: influence the mailstream of high school or your parents or
Speaker 1: luck of the draw?
Speaker 2: Yeah, it's all three, It's all three. What radio station
Speaker 2: was playing every night when you went to sleep? You know,
Speaker 2: you think that you were born to sing and perform
Speaker 2: a certain way? Well, what a coincidence. No one's doing
Speaker 2: that with this sitar because they weren't born in Bangalore, right,
Speaker 2: And so the noise in your head combined with the
Speaker 2: encouragement or discouragement you get, combined with your identity, combined
Speaker 2: with did you get a call when you were at
Speaker 2: Risdy to join Tina and David? Or didn't you because
Speaker 2: if you didn't, we've never heard you play.
Speaker 3: The bass or the or the drums.
Speaker 1: Okay, breaking it down on a granular level, success, what
Speaker 1: percentage is luck?
Speaker 2: Well again, I keep playing with words with you, Bob.
Speaker 2: I'm sorry, I'm not sure what you mean by success,
Speaker 2: and I'm not sure what you mean.
Speaker 1: Oh okay, okay, let's use conventional wisdom, which is not
Speaker 1: internal success, but the measurable success of the external world.
Speaker 1: It can be dollars, it can be chart positions, et cetera.
Speaker 1: We live in a world where you have these billionaires
Speaker 1: write books saying how I did it, but people don't
Speaker 1: understand is that's how they did it. You can't replicate
Speaker 1: those steps. If you know those people, they are unique individuals. Okay,
Speaker 1: Then there are people who say, I'm sick of hearing
Speaker 1: the rich people tell me how they did it. They
Speaker 1: were just lucky. Whatever. Let let's let's go to Bill Gates.
Speaker 1: Bill Gates was approached by IBM. They said they need
Speaker 1: an operate system for their new computer system.
Speaker 4: He didn't say I don't have that. He said, well,
Speaker 4: hold on a second, I could do that for you.
Speaker 4: I mean when bought some other operating system and sold them.
Speaker 4: So the question is, no matter what he did, would
Speaker 4: Bill Gates have been successful?
Speaker 1: Okay? Or you know, are there people who are really
Speaker 1: good but they just don't hit the right situation.
Speaker 2: I have no doubt in my mind that every billionaire
Speaker 2: that I've ever met is lucky. And Bill Gates was
Speaker 2: lucky long before he got that call from IBM that
Speaker 2: the books in which someone tells you here's how I
Speaker 2: did it, are a selective recall of some lucky moments
Speaker 2: interspersed with a small amount of grit and determination. It
Speaker 2: is very clear that lots and lots and lots of
Speaker 2: people are born with enough privileged to show up in
Speaker 2: Silicon Valley and then fail, or that something goes well
Speaker 2: and then they double down on it and they fail.
Speaker 2: But sometimes they double down on it and it goes well.
Speaker 2: So the mythology that this sort of external success is
Speaker 2: completely earned is just mythology.
Speaker 3: And you know so a.
Speaker 2: Simple example, Yahoo was built on the Stanford computer system,
Speaker 2: and as it grew, two students at Stanford were making
Speaker 2: the thing work. Stanford calls them up and says, look,
Speaker 2: you guys are using way too much bandwidth. We're kicking
Speaker 2: you off. And they know my friend Lisa, and my
Speaker 2: friend Lisa knows the people at Netscape. Now, the people
Speaker 2: at Netscape at the time, we're getting more trafficked to
Speaker 2: their website than almost any other website.
Speaker 3: This is nineteen ninety five or six or something.
Speaker 2: And if you went to Netscape, the homepage for the browser,
Speaker 2: so when you turned on the best browser on the internet,
Speaker 2: it took you to Netscape's homepage. There was a search box,
Speaker 2: and they had a problem, which is people were typing
Speaker 2: stuff into the search box and sometimes they would overload
Speaker 2: whichever search engine you went to. So Netscape said, sure,
Speaker 2: we'll put Yahoo on our servers so that way it
Speaker 2: won't crash when we send people to them. If that
Speaker 2: hadn't happened, you never would have heard of Yahoo. That
Speaker 2: had nothing to do with David or Jerry. That had
Speaker 2: to do with proximity, the luck of the draw, the
Speaker 2: network effect, the multiplication of small advantages getting to be
Speaker 2: bigger advantages. And the same thing's true for Howard Schultz.
Speaker 2: He takes over a coffee shop that has two outlets
Speaker 2: that doesn't sell coffee. Well, Howard had a really insightful
Speaker 2: idea about what Starbucks could become, but it could just
Speaker 2: as easily have been Pietz or somebody else that ended
Speaker 2: upping the United States. I think we can set ourselves
Speaker 2: up to increase the chances we get lucky, or to
Speaker 2: multiply it once we do get lucky. But I don't
Speaker 2: think people should bet their life on getting lucky.
Speaker 1: Let me give a personal example. When I was living
Speaker 1: as a ski bum in Utah. I was living with
Speaker 1: these guys. They would meet people out on the hill
Speaker 1: and they would invite them to stay with us. Okay,
Speaker 1: and this I would never do anything like that. I
Speaker 1: guess my upbringer, who are these people? Where are they
Speaker 1: coming from? Taking to my house? Whatever? So is that
Speaker 1: mindset ultimately working against my having lucky situations? Or is
Speaker 1: it about finding your own situation where your personality works.
Speaker 2: Okay, So now we're talking about strategy, and I love
Speaker 2: talking about strategy. That's what my new books about. Strategy
Speaker 2: is a philosophy of becoming. It's about seeing the system them.
Speaker 2: So the strategy of the first person who funded my
Speaker 2: internet company was if anybody had a pulse and an
Speaker 2: internet company, he would write them a check for one
Speaker 2: hundred thousand dollars because he had enough money to do
Speaker 2: that eighty times, and he just believed that this thing
Speaker 2: was going to go in a certain direction. If you
Speaker 2: think about the strategy that someone like Barry Gordy brought
Speaker 2: to building his record label, it wasn't are you a
Speaker 2: guaranteed hit? It's do I think that this small amount
Speaker 2: of money is going to take to record a track
Speaker 2: from you is going to get me to the next level,
Speaker 2: just be promiscuous about it. So perhaps these guys had
Speaker 2: a strategy that said, more surface area, more exposure to
Speaker 2: the kind of people who come here, will make our
Speaker 2: lives more interesting. And if the strategy we bring to
Speaker 2: whatever change we're making is working, fantastic, that's great. But
Speaker 2: in the music business, particularly since it's changed in the
Speaker 2: last twenty years, many of the strategies that we were
Speaker 2: indoctrinated as music people to believe don't work anymore, and
Speaker 2: it's boiling down for some of those people to I
Speaker 2: hope I get lucky. That's not a strategy, that's just
Speaker 2: a wish. And so when you see somebody who says, oh,
Speaker 2: there's a new social media platform, my strategy is every
Speaker 2: time there's a new social media platform, go in early
Speaker 2: and make a splash, because I will have outsize influence
Speaker 2: there and it's more likely I'll grow to the next step.
Speaker 2: That's a strategy. It's not a strategy to say I'm
Speaker 2: going to sound just like this person and I hope
Speaker 2: I get more spins on Spotify.
Speaker 1: Tell us more about your new book.
Speaker 2: So a lot of people people like you will ask
Speaker 2: me questions that they think are marketing questions, but they're
Speaker 2: really strategy questions. And I don't do any coaching or consulting,
Speaker 2: but I like chiming in with interesting problems. And I
Speaker 2: found that people didn't see what I was seeing about strategy.
Speaker 2: Strategy is games and empathy and systems and.
Speaker 3: Time.
Speaker 2: Games, empathy, systems and time, and if you can see them,
Speaker 2: you can make a different path forward. Games are simply
Speaker 2: I made this move, it didn't work. I'm not a
Speaker 2: bad person. I just made the wrong move. I made
Speaker 2: this move. They made that move.
Speaker 3: In return.
Speaker 2: Systems are what you've been writing about so eloquently for
Speaker 2: all these years, right with personalities involved. But you see
Speaker 2: the system, you see which forces push things in which direction.
Speaker 2: Empathy is I don't know what you know. I don't
Speaker 2: believe what you believe. I don't even want what you want.
Speaker 2: But I'm going to bring you something that matches what
Speaker 2: you believe you want. So if I'm a musician playing
Speaker 2: my hit for the four thousandth time, no one in
Speaker 2: that room has heard me play it four thousand times,
Speaker 2: I am bringing it to them because they need to
Speaker 2: hear it, not because I want to play it. So
Speaker 2: it's a gift and time. Time is the key to
Speaker 2: the whole thing in the music business. Not four or
Speaker 2: four time or five to four of your Dave Brubeck,
Speaker 2: but time says, the first day my record, my song
Speaker 2: is out there, only one hundred people are going to
Speaker 2: listen to it. What do I have to do to
Speaker 2: make that one hundred go to two hundred, five hundred,
Speaker 2: one thousand and a million. Over time, these things unfold.
Speaker 2: And so when we think about the legends that are
Speaker 2: still in our lives, like you know, Joni, part of
Speaker 2: the reason is because she's been at this for a
Speaker 2: very long time. And there are other people who did
Speaker 2: a thing in nineteen sixty nine and then stopped fertilizing
Speaker 2: and stopped planting, and so time ran out for them.
Speaker 2: So what we're doing is planting seeds to create the
Speaker 2: conditions for tomorrow.
Speaker 1: You know, this is interesting. There are a couple of
Speaker 1: classic examples in the music business of people who achieved
Speaker 1: great success and then intentionally went in a different direction,
Speaker 1: alienating their audience. So you have people like Neil Young,
Speaker 1: he doesn't want to be pigeonholed. You have someone like
Speaker 1: Bob Doing, who happens to be eighty three. He is
Speaker 1: on the road singing material that most people cannot recognize,
Speaker 1: even when it's well known material. Are we just saying
Speaker 1: he's saying to himself, I am this old. I can
Speaker 1: do it however I want to. Or do you think
Speaker 1: he has a conscious strategy?
Speaker 2: So this is where the art comes in. And this
Speaker 2: is why I have so much respect for people like
Speaker 2: Herbie Hancock and Miles Davis and what Dylan decided to
Speaker 2: do several times in his career, the willingness to get
Speaker 2: booed offstage because the musicians say, I got into this
Speaker 2: business because I want freedom. I got into this business
Speaker 2: because I want to let the muse out. I got
Speaker 2: into this business because I want to be a musician,
Speaker 2: not a cover band. And yet almost all the people
Speaker 2: who have been at this for a long time are
Speaker 2: cover bands of their former selves, and they gave up
Speaker 2: the dream in order to be popular. So when Miles
Speaker 2: played with his back to the audience, or when Dylan,
Speaker 2: according to his fictional autobiography, intentionally went back to the
Speaker 2: same city three years in a row, and what it
Speaker 2: says is the first year, what I'll do is I'll
Speaker 2: offend the fans who came to hear the old me.
Speaker 2: The second year, the people I didn't offend will bring
Speaker 2: their friends, and then the third year I'll have my audience. Right,
Speaker 2: there was this act of independence. So I don't know Bob.
Speaker 2: I have no idea what noise he's got in his head.
Speaker 2: And lots of strategies are intuitive. But as a creator me,
Speaker 2: I regularly don't do sequels. I am trying very hard
Speaker 2: not to be a cover band of me because I
Speaker 2: got into this because I want to make art, not
Speaker 2: because I want to be popular.
Speaker 1: Okay, I just want to don and I from earlier
Speaker 1: in on conversation, you're talking about the motivation of musicians
Speaker 1: in high school and you talk about filling a hole inside.
Speaker 1: Can you amplify that for us?
Speaker 3: Okay?
Speaker 2: So this the insatiable needs. That is how you become
Speaker 2: a billionaire. That is how you build something for the ages.
Speaker 2: Everyone has a need for lunch every day, but it's
Speaker 2: not insatiable. We don't eat lunch four times a day.
Speaker 2: One lunch is enough for most people. But we have
Speaker 2: an insatiable need to be loved often, or to be respected,
Speaker 2: or to achieve something. And what often happens when someone
Speaker 2: becomes successful is they try to top what happened to
Speaker 2: them last time, which is why it's so difficult to
Speaker 2: win a gold medal in the Olympics, because you might
Speaker 2: not be able top that again. And so if that
Speaker 2: was your need to show the naysayas they were wrong
Speaker 2: and to always get a better personal best, you better
Speaker 2: find a new way to make a living because you're
Speaker 2: not going to find it running to decathlon again. And
Speaker 2: so what happens often for the driven musician is, yeah,
Speaker 2: I'm in another city twenty three out of twenty four
Speaker 2: days in a row, in another grimy bar. But here
Speaker 2: is that chance to fill that hole again. And I
Speaker 2: know it's not going to be filled forever, but filling
Speaker 2: it tonight is the most important thing in the world
Speaker 2: to me. So someone like Springsteen, who's worth more than
Speaker 2: half a billion dollars, how much would you have to
Speaker 2: pay him to go do a performance he doesn't feel
Speaker 2: like you couldn't. What he feels like is filling the
Speaker 2: hole at least for now.
Speaker 1: Okay. I have a theory. People always ask how come
Speaker 1: these people have hits and then they dry up. Most
Speaker 1: of the people from the classic era today the landscape's different.
Speaker 1: Classic era. These were alienated people, didn't interact that well
Speaker 1: to use the vernacular, couldn't get laid. So they work
Speaker 1: with this incredible effort. They get wealth, they get sex,
Speaker 1: and they realize it still doesn't fill the hole, and
Speaker 1: then they just don't have the motivation anymore. They just
Speaker 1: can't do it anymore.
Speaker 3: I think as part of it, I think.
Speaker 2: A very big part of it is a fear of
Speaker 2: being seen as a front odd fear of failing from
Speaker 2: the perch that they're on. And so if you don't
Speaker 2: push outside of the new comfort zone, then you can't
Speaker 2: get in trouble. If you stay in the new comfort zone,
Speaker 2: you're back to being a cover band, and cover bands
Speaker 2: don't get booed off stage. And so it takes a
Speaker 2: much deeper hole to have to decide, Okay, I'm going
Speaker 2: to do a completely different thing and I'm going to
Speaker 2: fail at it. And you know, Billy Joel and Paul
Speaker 2: McCartney and Sting make classical music albums. Well, they knew
Speaker 2: intellectually that the classical music world wasn't going to embrace them,
Speaker 2: but they needed the feeling that would come from going
Speaker 2: way outside that comfort zone, even if it meant that
Speaker 2: it wasn't going to work.
Speaker 1: Okay, So once again, how much of this is conscious
Speaker 1: and how much is just intuitive? And does it depend
Speaker 1: what walk of life you're in.
Speaker 2: So I was talking to a friend of mutual friend
Speaker 2: of ours who has made many gold and platinum records,
Speaker 2: and I said to him, so, what's the secret of
Speaker 2: a hit record? He said, Oh, it's the song, There's
Speaker 2: no question about it. You got to find a great song.
Speaker 2: I said, well, how do you know if it's a
Speaker 2: great song? He said, because it's a hit record, And
Speaker 2: he had no words to describe the intuition. So there
Speaker 2: are many industries where intuition drives the whole thing. And
Speaker 2: then there are other industries, like I would say heart surgery,
Speaker 2: where being a scholar of it definitely helps you do
Speaker 2: better because the words help you improve quality as you go.
Speaker 2: So if you look at the way they used to
Speaker 2: make cars, the crafts people on the Rolls Royce assembly
Speaker 2: line could feel whether the piece of metal was going
Speaker 2: to be stressed or not. They could feel how it
Speaker 2: should fit together. You can't build a Toyota by doing that.
Speaker 2: You build a Toyota by using words and measurement for everything.
Speaker 3: So I think we have failed every.
Speaker 2: Time we've tried to come up with words and algorithms
Speaker 2: for making hit music that lasts for the ages. But
Speaker 2: I think it's very clear that words help record executives
Speaker 2: do much better because now if they can articulate to
Speaker 2: people what they're trying to do, they can get other
Speaker 2: people to do it with them.
Speaker 1: Okay, staying with the music business and staying with the
Speaker 1: traditional executives, the traditional pillars of success, print, radio, physical
Speaker 1: distribution have all been decimated such that a lot of
Speaker 1: things start independently, whether the especially online. To what degree
Speaker 1: must you change your philosophy with the external and what
Speaker 1: are they not seeing about the future?
Speaker 2: Okay, so you've taught me so much about this, but
Speaker 2: let me try to use a different story to help
Speaker 2: people understand the system. There were two key things that
Speaker 2: most people would not name that led to pop music
Speaker 2: as we know it. The first one is the law
Speaker 2: of physics that affects spectrum of the radio. There can
Speaker 2: only be a few radio stations in a city, and
Speaker 2: when you're add FM, it goes up by double but
Speaker 2: that's it. There can only be a few. And number
Speaker 2: two the headphone jack. When Sony came out with the
Speaker 2: transistor radio. The breakthrough was it had a headphone jack,
Speaker 2: and so for the first time in recorded history, teenagers
Speaker 2: did not have to listen to the music their parents
Speaker 2: were listening to. It made it so that teenagers, it
Speaker 2: invented teenagers could find what their peers were doing instead
Speaker 2: of having to sit in the living room.
Speaker 3: With their parents.
Speaker 2: Those two things created a forty year cycle that brought
Speaker 2: us all this classic music. And what happened, well, we
Speaker 2: got rid of radio and we don't need the headphone
Speaker 2: jack anymore. The end result is there is no scarcity
Speaker 2: of spectrum. There is no desire for the shorthad. The
Speaker 2: long tail is real. People connecting with small circles of
Speaker 2: people is real, and the music industry is gone. We
Speaker 2: have music, more music than ever before. But the industry
Speaker 2: cannot be called the industry the way it was because
Speaker 2: it's not a few assembly lines turning out stuff that
Speaker 2: are hits. It is instead this permeable long tail. The
Speaker 2: same thing has happened in my industry of books. The
Speaker 2: number of books published every year has gone up by
Speaker 2: a factor of twenty five, and the laydown of a
Speaker 2: new book, meaning how many of the stores take in
Speaker 2: the first week is down by a factor of twenty
Speaker 2: and so yeah, that's what decimated means ninety percent gone.
Speaker 2: And we're going to need a new model if we
Speaker 2: want musicians to make a living, and we need definitely
Speaker 2: need a new model if the people who help musicians
Speaker 2: and get paid.
Speaker 3: For it are going to make a living.
Speaker 1: Let's stay with books for a second, your area of
Speaker 1: true expertise. What's the future for books?
Speaker 2: So five hundred years, a book is a physical object,
Speaker 2: and in order to get a book into a bookstore,
Speaker 2: another book has to leave the bookstore because the bookstores
Speaker 2: can't get any bigger. And this physical object that we
Speaker 2: had to spend years of our lives writing and bringing
Speaker 2: to you that effort is received by the reader. It
Speaker 2: means this is important. It's not a blog post someone
Speaker 2: about in fifteen minutes. Someone invested in this. So there's
Speaker 2: a lot to be said for the Pristian value of
Speaker 2: I am holding this artifact. But it has been ripped
Speaker 2: to shreds, not with mal intent, but for sure by
Speaker 2: Amazon and Audible because it's very hard to tell a
Speaker 2: page of a kindle book from a blog post, from
Speaker 2: a series of tweets. And when we atomized ideas we
Speaker 2: rip the heart out of the industry. Add to that,
Speaker 2: the death of the independent bookstore and book publishing is
Speaker 2: on fumes, and it only survives because of the backlist.
Speaker 2: It only survives, as you've talked about, because of the
Speaker 2: royalties you're making from the stuff you published ten or
Speaker 2: twenty years ago. This is a crazy time to start
Speaker 2: a new publishing company, which I just started working with.
Speaker 2: But books matter still, particularly to people of our general
Speaker 2: because they're a symbol and a totem. And I don't
Speaker 2: think we're ever going to see books be more important
Speaker 2: than they are today. And books are way less important
Speaker 2: than they were twenty years ago.
Speaker 1: Okay, you have a new book, so what's the strategy.
Speaker 2: So my strategy, which because I'm a writer I've said
Speaker 2: out loud, is this. I stopped looking for new readers
Speaker 2: twenty years ago because I found chasing new readers would
Speaker 2: force me to be a writer. I didn't want to
Speaker 2: be writing about stuff I didn't want to write about.
Speaker 1: Could you just be a little deeper? What would you
Speaker 1: not want to be? What would you not want to
Speaker 1: write about?
Speaker 2: So if what happened to the media of in my
Speaker 2: space anyway? Starting about twenty years ago is you should
Speaker 2: be quote authentic and vulnerable, and you should have meltdowns,
Speaker 2: and you should pick fights, and you should tell really
Speaker 2: simple things and this amazing secret will reveal everything, and
Speaker 2: you should dumb it down. And if you're lucky, when
Speaker 2: you do that, you could sell a whole bunch of
Speaker 2: clicks or books or whatever it is you want to sell.
Speaker 2: But it doesn't last. And instead I said, I'm here
Speaker 2: to write for the people who give me the benefit
Speaker 2: of the doubt. I'm here to write for people who
Speaker 2: trust me to tell them something that they need to hear,
Speaker 2: and then maybe they'll tell their friends. So if those
Speaker 2: people go out and share an idea, that's when I succeed.
Speaker 2: I'm giving ideas to people who benefit from telling the others.
Speaker 2: So my strategy for the Strategy book is how do
Speaker 2: I create the conditions for people to talk about it?
Speaker 2: So in addition to the book, I made the five
Speaker 2: point two million combination card deck, and I made the
Speaker 2: collectible chocolate bar with trading cards in it, and mostly
Speaker 2: I went on one hundred podcasts and I talked about
Speaker 2: it in a way that would help other people talk
Speaker 2: about it. Because I'm not trying to sell a paper
Speaker 2: piece of paper. I'm not even trying to sell a book,
Speaker 2: trying to sell a conversation, because if the people who
Speaker 2: are listening to us today sit down with their colleagues
Speaker 2: and talk about their strategy, I will have accomplished something.
Speaker 1: Let's say you're on a podcast and your goal is
Speaker 1: to get someone to start a conversation. You just say
Speaker 1: I am who I am, and that's going to be natural.
Speaker 1: Or do you say there are certain things I want
Speaker 1: to say and how I want to say them.
Speaker 2: So what we're trying to do, whenever we make a
Speaker 2: change happen is to create tension. And the tension for
Speaker 2: a teenager with music is, oh, I haven't heard that
Speaker 2: new song. I need to hear it because I'll be
Speaker 2: left behind. The tension for somebody who in their dreams
Speaker 2: was going to go see Taylor Swift is the concert's
Speaker 2: going to sell out. I got to figure out a
Speaker 2: way to get a ticket before they're all gone. Tension
Speaker 2: is very common in things where there's scarcity and time
Speaker 2: is involved. But there's other sorts of tension that come
Speaker 2: even just from the simple dana because the person who
Speaker 2: hears it needs to say Dana or else they're unsettled.
Speaker 2: So what I am doing with my work is opening
Speaker 2: the door for people to see where I'm going. But
Speaker 2: I don't steal the revelation. If I tell them every punchline,
Speaker 2: there's no growth, there's no learning. So instead I can
Speaker 2: lay out this groundwork and they can come to the
Speaker 2: conclusion on their own in their industry that there's something
Speaker 2: they can do next and it makes sense to them.
Speaker 1: Okay, so you have a new book. How far in
Speaker 1: advance of publication did you have the eye be to
Speaker 1: do the book?
Speaker 3: Okay, so.
Speaker 2: Some people, including me, in the old days, if you're
Speaker 2: in the book business, you need a book where you
Speaker 2: don't get paid. So I would wake up in the
Speaker 2: morning and think of book ideas. When I was a
Speaker 2: book packager, I sold one hundred and twenty books a
Speaker 2: book a month for ten years, and in order to
Speaker 2: do that, I had to think of a new book
Speaker 2: every two or three days. That's what I did, and
Speaker 2: I stopped doing that about ten years ago because making
Speaker 2: a book is exhausting and I can get my ideas
Speaker 2: into the world much more efficiently and to more people
Speaker 2: with a blog post. So I only write a book
Speaker 2: when I have no choice, and I have no choice
Speaker 2: because the book made me do it. So what happened
Speaker 2: here is I write every day, no matter what. And
Speaker 2: I started writing about a year ago, but not to
Speaker 2: write a book, just to write down a bunch of
Speaker 2: blog posts that I thought would rhyme with each other.
Speaker 2: And after I had written twenty of them, which took
Speaker 2: about three days, I realized there were all these pieces
Speaker 2: in between that we're missing. So then I had forty
Speaker 2: of them, and I thought, uh, oh, I have a
Speaker 2: problem now because I have a book. And I was
Speaker 2: not in any mood to publish a book because it's,
Speaker 2: as I said, a slog. But it wouldn't let me go.
Speaker 2: So there was a book starting in November. I wrote
Speaker 2: it in not a lot of time, and then I
Speaker 2: rewrote it two or three times. Then the work of
Speaker 2: publishing the book that takes six more months of design
Speaker 2: and discussion and layout, and I do all the typesetting
Speaker 2: and coverge design myself, etc. Recording the audiobook cost me
Speaker 2: my voice for over a month, going to DNT and
Speaker 2: getting scoped. But the book won't let you go.
Speaker 1: Okay, there was an element there I want to drive too,
Speaker 1: which is promotion. You know, the music business, we've been
Speaker 1: through a lot of stuff. In the last twenty five years.
Speaker 1: There was all the issues of leaks. Albums were coming
Speaker 1: out prior to the official release date. Someone in the
Speaker 1: manufacturing plant stole a copy whatever, and everybody was freaked out.
Speaker 1: Now we've actually gone two things have changed. One, it's
Speaker 1: hard to gain notice at all at some level. Would
Speaker 1: be great if you were leaked, okay, And then a
Speaker 1: lot of major artists don't do any advance publicity at all.
Speaker 1: They just put the album out and then things go.
Speaker 1: So what's the status of advanced publicity today?
Speaker 3: All right?
Speaker 2: So Tim O'Reilly famously said your problem is in piracy,
Speaker 2: your problem is obscurity, And speaking just for me, if
Speaker 2: I thought five million people would read my book tomorrow,
Speaker 2: if I just uploaded the PDF, I would do it
Speaker 2: in the heartbeat. The hard part now for music but
Speaker 2: always for books, has been getting people to pay attention, right,
Speaker 2: And attention is scarce. You don't get any more of it.
Speaker 2: It gets rebuilt every day, but you don't get any
Speaker 2: more of it. So what's the point of advance publicity? Well,
Speaker 2: if there's retail, if there's strawberries and Tower and three
Speaker 2: other record stores that are going to kick you out
Speaker 2: of the shelves if you don't sell in the first
Speaker 2: four weeks. You need to prime the pump. So the
Speaker 2: first couple of days are really hot, but Spotify doesn't
Speaker 2: kick people out, so there's no upside from a streaming
Speaker 2: point of view. To advance publicity, what you need to
Speaker 2: do is become popular enough that the people who want
Speaker 2: to only listen to things that are popular are going
Speaker 2: to listen to you because you're popular. And that happens
Speaker 2: when you concentrate the promotion geographically and over time, because
Speaker 2: that burst of focus causes people to say, you got
Speaker 2: to go do this, and you know, we see this
Speaker 2: with you know, about half of the time you review
Speaker 2: something that's on streaming TV in your letter, it's because
Speaker 2: it's sort of new and you're noticing it because other
Speaker 2: people are noticing it. And sometimes you find a gem
Speaker 2: that we missed a year ago. That's a whole different story.
Speaker 2: But the story of launch and promotion is the author's
Speaker 2: job is to sell the first ten thousand copies of
Speaker 2: the book, and then after that, it's the book's job
Speaker 2: to sell the rest.
Speaker 1: Okay, So in your particular case, the six months of
Speaker 1: getting it all together to publication date. You have these
Speaker 1: external products you're using as hype. How do you feel
Speaker 1: you're going to sell the first ten thousand copies?
Speaker 2: So I recorded eighty guest podcasts over the course of
Speaker 2: two and a half months, and my deal with each
Speaker 2: person who is super great to work with was you
Speaker 2: got to hold it in Simbargo to October twenty second.
Speaker 2: So on one day I was on eighty podcasts, which
Speaker 2: means that you know, through the math, let's say eight
Speaker 2: million people give or take two million people somewhere in
Speaker 2: there heard me talking about this idea, and that was
Speaker 2: my biggest lift to make it happen. And then the
Speaker 2: second part is I'm very lucky a million people read
Speaker 2: my blog in one form or another who give me
Speaker 2: the benefit of the doubt. And I said to them,
Speaker 2: with no advance hustle, today's the day. What I did
Speaker 2: a month before that was I said to the true fans,
Speaker 2: the people who are the super fans. I've got one thousand,
Speaker 2: seven packs, seven copies of the book, a chocolate bar,
Speaker 2: the strategy deck, and my online course together worth eight
Speaker 2: hundred bucks. I'm selling it for one hundred and twenty
Speaker 2: five dollars. And so the people who for whom that's
Speaker 2: an instant yes, said great. And that means that we
Speaker 2: sold out in thirty six hours, and that's a little
Speaker 2: bit like what Ryano can pull off with a grateful
Speaker 2: Dead record. And so I sold seven thousand books before
Speaker 2: the book came out, So getting to ten thousand wasn't
Speaker 2: that much of a lift.
Speaker 1: So how long do you expect the life of the
Speaker 1: book to be well?
Speaker 2: I was at a conference on Friday and someone walked
Speaker 2: up to me and said, Purple Cow changed my life.
Speaker 2: And I wrote that book twenty three years twenty five
Speaker 2: years ago. So that's my goal. My goal is to
Speaker 2: write a book that twenty five years from now isn't
Speaker 2: some weird dated artifact, but is in fact worth looking
Speaker 2: at even then.
Speaker 1: So you have all this great insight you did go
Speaker 1: to Stanford Business School, were you taught or is this
Speaker 1: all insight you gained individually?
Speaker 2: I taught none of this at Stanford Business School. Stanford
Speaker 2: Business School when I went was an interesting cultural experience
Speaker 2: that was largely devoid of actual content that you could
Speaker 2: that would take more than six hours to read in
Speaker 2: a book. If someone had just like condensed everything they
Speaker 2: taught us. It would only take six hours to read.
Speaker 2: But the cultural experience of being in a group of
Speaker 2: people who were expected to go into the world and
Speaker 2: do a certain sort of thing really made a difference
Speaker 2: when it came to feeling like an imposter, made a
Speaker 2: difference of changing the perspective you would have. And then
Speaker 2: the rest of it was being fortunate enough to be
Speaker 2: in the room where I didn't get thrown out when
Speaker 2: I said stupid things, and I could figure out what
Speaker 2: a stupid thing was and not do it again. And
Speaker 2: that cycle doing it as fast as possible is the
Speaker 2: best life advice I have when young people ask me
Speaker 2: what they should do. If you want to learn marketing,
Speaker 2: do marketing. If you want to build a career, find
Speaker 2: the fastest growing company you can because in a fast
Speaker 2: growing company there's always.
Speaker 3: A new job to do.
Speaker 2: You're not taking away responsibility from someone else, it's just
Speaker 2: sitting there. Someone needs to grab it.
Speaker 1: So, to my knowledge, which is not extensive, Stanford Business
Speaker 1: School is a little bit different from the others in
Speaker 1: that it focuses on small groups. A to what degree
Speaker 1: is it different from other environments and was it really
Speaker 1: the hothouse of being at Stanford because you hear a
Speaker 1: lot about Harvard Business School and it's people say it's
Speaker 1: primarily about the relationships they make more than what's in
Speaker 1: the school. So what was your experience.
Speaker 2: Well, the best man of my wedding in my old
Speaker 2: business partner went to Harvard when I went to Stanford,
Speaker 2: so I had sort of a close view of this.
Speaker 2: The indoctrination at Harvard. Again, we're telling you a long
Speaker 2: time ago, but the indoctrination at Harvard is very intentional,
Speaker 2: and it's not just the relationships with your section. So
Speaker 2: here's one way to think about it. The first day
Speaker 2: of the first class at Harvard, you elect your alumni representative.
Speaker 2: That's profound. I love that because they're sending this message
Speaker 2: that says you're going to sit through this for two years.
Speaker 2: But the reason we're here is because you're going to
Speaker 2: be alumni. But it doesn't change so much from year
Speaker 2: to year, so it doesn't matter if you're Harvard eighty
Speaker 2: six or Harvard ninety four. Harvard people are Harvard people.
Speaker 2: We know they're going to behave in meetings, we know
Speaker 2: they're going to you know, brutalize their way through when
Speaker 2: it needs an unlimited amount of time or whatever. So
Speaker 2: they hire each other and they respect each other, and
Speaker 2: there's a status thing going on. Stanford when I was there,
Speaker 2: felt like it was much more focused on helping people
Speaker 2: see themselves as independent, thoughtful, consulting type professionals who could
Speaker 2: you know, like Samurai, who would walk into a place
Speaker 2: and be the smartest person in the room, even though
Speaker 2: we weren't the smartest people in the room. It was
Speaker 2: just this understanding that being smart was sufficient, And I
Speaker 2: think that's wrong. And my gut is that they have
Speaker 2: changed it a lot since then, because what most business
Speaker 2: is about, especially the music businesses, in that meeting, in
Speaker 2: that interaction, are you engaging with someone else to create
Speaker 2: the conditions for something new to happen. This isn't about
Speaker 2: using spreadsheets to squeak out an extra nickel. It's about
Speaker 2: finding a window that's worth opening and a door that's
Speaker 2: worth walking through. And that is a practice, just like
Speaker 2: writing a book is a practice and writing a song
Speaker 2: is a practice. But we don't do a very good
Speaker 2: job of teaching it to people.
Speaker 1: Let's stay you mentioned consulting, not in other way. I'm
Speaker 1: going to bring it up. There's a huge backlash against
Speaker 1: McKinsey and other consultants. What's your view of consulting.
Speaker 3: I have.
Speaker 2: I don't think we've heaped nearly enough. Shame on the
Speaker 2: people who said I'm just doing my job but also
Speaker 2: busy figure out how to get more people to smoke
Speaker 2: a jewel or figure out how to get some monopoly
Speaker 2: to extract more money from people who don't have money.
Speaker 2: You're responsible if you're doing the work, your fingerprints are
Speaker 2: on it. You should own what you do. And consulting
Speaker 2: in general is magical when someone from the outside can
Speaker 2: see a problem that you can't see because you're too
Speaker 2: close to it. But that's not what most consultants get
Speaker 2: to do because the hardest part of consulting is getting clients.
Speaker 2: And getting and keeping clients requires an enormous amount of
Speaker 2: understanding the status quo and making sure your right answer
Speaker 2: is acceptable. And it's not really about the right answer,
Speaker 2: because we're not doing engineering here, we're doing people.
Speaker 1: I know someone who's CFO of a large company worked
Speaker 1: for one of these name brand consulting firms, McKenzie. I say,
Speaker 1: why'd you leave? Because I didn't believe in the model,
Speaker 1: Because they're taking fresh graduates. We're going out there. We
Speaker 1: don't know what we're talking about, right.
Speaker 2: So you know, when you look at a place like
Speaker 2: McKinzie or Arthur Anderson that has so many people there,
Speaker 2: clearly half of them are below average no matter what
Speaker 2: scale you want to look at. But mostly the problems
Speaker 2: aren't that hard. Mostly the problems simply require verbalization. When
Speaker 2: you hire McKenzie, you're often hiring them so you can
Speaker 2: go to the board of directors and say, I'm doing
Speaker 2: this because McKenzie said we should, and that's what you
Speaker 2: paid for, not that they came up with some sort
Speaker 2: of brilliant insight that you couldn't come up with on
Speaker 2: your own. It's very cool when you see the rare
Speaker 2: moment when a consultant comes up with a brilliant insight. So,
Speaker 2: for example, in the eighties, seventies and eighties, digital watches
Speaker 2: started to show up. And there's something in the production
Speaker 2: of semiconductors called experience curve, which is the ten thousandth
Speaker 2: chip you make is way way, way, way way cheaper
Speaker 2: than the first one, and all these people who were
Speaker 2: making digital watches were pricing them fairly at three hundred
Speaker 2: dollars because it was costing them three hundred and two
Speaker 2: hundred dollars to make them. And this consultant figured out
Speaker 2: and explained to Texas Instruments, if they made a lot
Speaker 2: of watches, they could make them for four dollars each.
Speaker 2: So Texas Instrument lowered the price of digital watches to
Speaker 2: way below what it costs to make, so that they
Speaker 2: would sell a lot of them, and thus their costs
Speaker 2: would go down and no one would be able to
Speaker 2: catch up for years and years. And that's exactly what happened.
Speaker 2: That's that's a consultant bit of brilliancy. But that's not
Speaker 2: usually what consultants are busy doing.
Speaker 1: It's interesting you speak of watches because in the watch world,
Speaker 1: especially with Rolex, which is a major brand, they're constricting availability. Yep.
Speaker 1: And you believe that's a strategy just about image or
Speaker 1: what do you think the thinking behind that is.
Speaker 2: I love this topic, Bob, It's so much fun to
Speaker 2: talk to you. Okay, so we should talk about luxury goods.
Speaker 2: Luxury goods aren't better except at one thing, right, Like
Speaker 2: a Rolex watch does not tell more accurate time then.
Speaker 1: It tells, it tells less accurate times I happened to
Speaker 1: have one.
Speaker 2: Exactly than a digital watch. So what exactly do you buy?
Speaker 2: When you buy a burken bag or something from Louis
Speaker 2: Vuittont or go out for dinner for four hundred dollars,
Speaker 2: You are not buying the quality by most definitions of
Speaker 2: what you purchased. What you're buying is something where the
Speaker 2: motto is I paid a lot and I didn't get
Speaker 2: what I paid for. That the intentional waste of a
Speaker 2: verbulin of a what's his name verbulin good? Is the
Speaker 2: price is the quality. The price is the point. The
Speaker 2: scarcity is the point that if they made as many
Speaker 2: Rolexes as they could, it wouldn't be a luxury good anymore.
Speaker 2: That what makes it something that's worth owning is that
Speaker 2: you can afford to have paid more than you should
Speaker 2: have for the thing that does what's on your wrist.
Speaker 2: And luxury goods, as we see more and more income inequality,
Speaker 2: have become ever more profitable because the makers of luxury
Speaker 2: goods have figured out that every time they raised the
Speaker 2: price and lower the availability, profits go up, and so
Speaker 2: does demand.
Speaker 1: Okay, let's go a little bit deeper, because this is
Speaker 1: happening right now, some of these luxury goods. Burbery, which
Speaker 1: is not a super top, they started appealing to the
Speaker 1: more casual customer. I won't say things are cheap, but
Speaker 1: they're not out of reach yep. And they have now been.
Speaker 1: The brand is on a downhill slide. Okay, So what
Speaker 1: would your strategy be for a luxury good I'll give
Speaker 1: you one more exact Mercedes Benz. Mercedes Benz decided to
Speaker 1: decrease overall production and then move it to more expensive cars.
Speaker 1: So what do you think about the varying philosophies on
Speaker 1: each side of that.
Speaker 2: Okay, So, once you're a public company, the stock market,
Speaker 2: which is an idiot, wants you to make as much
Speaker 2: money as you can right now. So if we think
Speaker 2: about outlet malls, Burberry, but particularly Ralph Lauren, discovered that
Speaker 2: they could make different products in a different factory. Call
Speaker 2: them outlet mall direct to consumer seconds or whatever. But
Speaker 2: they're not seconds. It's not like they went and they
Speaker 2: got the seven thousand dollars cashmere thing and they found
Speaker 2: a little error in it and they're selling it for
Speaker 2: seventy bucks. It's a totally different sweater made in a
Speaker 2: totally different factory. The last time I checked, half of
Speaker 2: Ralph Lauren's profits came from outlet malls, from stores they
Speaker 2: owned in an outlet mall.
Speaker 3: So it's a one way road.
Speaker 2: You start down that road, you make a lot of
Speaker 2: money for a while, but it's almost impossible to reclaim
Speaker 2: the super exclusivity thing. So Burberry's has been dancing back
Speaker 2: and forth with this, trying to have it both ways.
Speaker 2: Very very hard to do. So when you think about
Speaker 2: the car business, car business gets even more complicated because,
Speaker 2: unlike a handbag which you can leave in your closet,
Speaker 2: cars you're gonna drive around and cars you're gonna drive
Speaker 2: around for a while, and the narrative of the person
Speaker 2: who's buying the car if it's not the Maybach, if
Speaker 2: it's not the most expensive one, is much more complicated.
Speaker 2: So Mercedes is one of the biggest car companies in
Speaker 2: the world. It's really hard for them to make that
Speaker 2: an exclusive luxury brand. It's also really hard for them
Speaker 2: to compete with Toyota. So there's somewhere in between, and
Speaker 2: there's always going to be this painful churn for people
Speaker 2: in that industry because they can't change the way Diane
Speaker 2: von Furstenberg Kay, Diane, you come out with a new
Speaker 2: line in six weeks for a small group of people.
Speaker 2: It takes six years for Mercedes to do that.
Speaker 1: Okay, switching back a gear. You're from a similar vintage.
Speaker 1: I'm a little older than you. But when I went
Speaker 1: to public high school, there were uh, there were the
Speaker 1: art kids. Everybody was middle class. If you were rich,
Speaker 1: you drove a Cadillac. No one knew what a billionaire was,
Speaker 1: and no one ever wanted their kid to be an artist.
Speaker 1: But some people that's you know, the path they went down.
Speaker 1: So today life is much harder financially, just period. I
Speaker 1: just remember this comes up with by physical therapist all
Speaker 1: the time. You know, you could live I'm seventy five
Speaker 1: or one hundred dollars a week, even if you adjust
Speaker 1: for inflation. You can't do that today. The scions of
Speaker 1: the middle and upper middle class. What people don't realize
Speaker 1: is people of that vintage young teenagers. They know the
Speaker 1: score better than anybody, and they don't want to grow
Speaker 1: up and be poor. They don't want to take the risk.
Speaker 1: So a lot of these more risky endeavors, certainly artistically,
Speaker 1: it is the lower classes that enter these fields. Let
Speaker 1: me let me go a little sideways to make the
Speaker 1: point even further. When Survivor blew up, the people whod
Speaker 1: Survivor believed that they were now stars. That did not
Speaker 1: turn out to be the case, but they believed it.
Speaker 1: When we hit Jersey Shore, people say I'm doing this
Speaker 1: as a lark, that I'm going back to Poughkeepsie. There
Speaker 1: is no future here. So when you have the lower
Speaker 1: classes involved, there's a different ethos. I'll do whatever you
Speaker 1: tell me to because this is just a lark, as
Speaker 1: opposed to the Jefferson airplane or the middle class artists
Speaker 1: of the sixties seven said, I don't want to do that.
Speaker 1: That doesn't feel good. So to what degreed does income, inequality,
Speaker 1: wealth disparity sit over all these creative arts and other
Speaker 1: elements of our society.
Speaker 2: Wow, there are lots of ways into this, and I
Speaker 2: don't think there's a definitive answer. I think we can
Speaker 2: begin with the fact that for a very very long time,
Speaker 2: the only people who were professional artists were people of wealth,
Speaker 2: and they either had a relative who was wealthy or
Speaker 2: they were wealthy themselves. And you know, you got the
Speaker 2: Jane Austen, that whole thing. You're not finding someone who
Speaker 2: is in a small village making music with any expectation
Speaker 2: that there's going to be an industry.
Speaker 3: That's going to propel them forward.
Speaker 2: We get to this zone, the zone when the phrase
Speaker 2: writer's block was invented. Writer's block is a made up malady,
Speaker 2: and it started shortly before Ernest Hemingway was named by
Speaker 2: Percy Shelley, Mary Shelley's partner brother husband.
Speaker 1: One or the other, you're out of my league, all right?
Speaker 2: Anyway, Writer's block is an affliction of middle class kind
Speaker 2: of creatives who don't want to fail on their way up. So, yes,
Speaker 2: you're touching on something important here. Now we get to
Speaker 2: the current day, but I think what you're leaving out
Speaker 2: of it is this golden age of artistic riches that
Speaker 2: came from the scarcity from the gatekeeper. It's going away
Speaker 2: that you can win TikTok, you can win YouTube and
Speaker 2: get a check. But it's not an industry the way
Speaker 2: it was when John Hammond would pick you. It's on
Speaker 2: an industry the way it was when you know, we
Speaker 2: listened to who was going to be the next hit.
Speaker 2: So with that said, I don't think we're going to
Speaker 2: end up with a lot of people who are fifteen
Speaker 2: years old today growing up saying I'm going to be
Speaker 2: the next Van Morrison, because I think they are smart
Speaker 2: enough to know that there might not be that path
Speaker 2: that they shouldn't, you know, get on a bus, go
Speaker 2: to LA and hope to get discovered at a drug
Speaker 2: store because that's not you know, starmaking machinery isn't there anymore,
Speaker 2: and I don't know what happens after that. We're not
Speaker 2: gonna runt of music, We're not going to run out
Speaker 2: of video slash movies, but it feels to me like
Speaker 2: the path is not particularly well lit either.
Speaker 1: There's been consolidation in the record industry. There are three
Speaker 1: major labels who are putting out fewer records in few
Speaker 1: were genres in error before Because we've referenced earlier, they
Speaker 1: can live off their previous product, which is generating capital
Speaker 1: and essentially no investment. But for a mature business like
Speaker 1: that in a changing environment, what might they do.
Speaker 3: Right?
Speaker 2: So this is a key strategy question, which is the
Speaker 2: feeling of entitlement that we get about how do we
Speaker 2: keep this going? But you don't get tomorrow over again?
Speaker 2: So what should they invest in to be able to
Speaker 2: have the careers that they want to have because the
Speaker 2: shareholders are going to ring every penny they can out
Speaker 2: of the assets that are already there. And what I've
Speaker 2: argued is we need to take a deep breath and
Speaker 2: think about what are the assets you own, and what
Speaker 2: are the skills you have, and what is the change
Speaker 2: you seek to make. So Simon and Schuster and Random,
Speaker 2: how if I had stopped by their offices, as I
Speaker 2: often did in nineteen ninety and said ask them those questions?
Speaker 2: They would say things like we organized the world's information.
Speaker 2: And if I said, no, what you do is you
Speaker 2: cut down trees and then hold them hostage, selling them
Speaker 2: to independent bookstores, they would look at me like I
Speaker 2: was clueless. But they could have started Google. It only
Speaker 2: took two people to start Google organizing the world's information. Right,
Speaker 2: Why didn't the book publishers start the search engines? Why
Speaker 2: didn't the book publishers take this great corpus of stuff
Speaker 2: they have and own a big piece of chat GPT
Speaker 2: Because they don't think that way. They're looking backwards, not forwards.
Speaker 2: So these three record labels have a particular competence in
Speaker 2: understanding what youth culture needs. Finding unknown creators and helping
Speaker 2: nurture those unknown creators to bring that idea in some form,
Speaker 2: to use culture to define in the generation. But instead
Speaker 2: of thinking that way, they're just looking for the next
Speaker 2: Taylor Swift, and I think that's a mistake. I don't
Speaker 2: think the middlemen are going to be rewarded the way
Speaker 2: they used to, because creators are discovering that they should
Speaker 2: go to the middlemen after they've become a hit, and
Speaker 2: then they're going to get to keep way more of
Speaker 2: what they have.
Speaker 1: Now. At this particular point in time, three major labels
Speaker 1: are either individually public companies Warner and Universal or Sony
Speaker 1: that's part of a much larger operation. No one there
Speaker 1: has skin in the game, which a you have a
Speaker 1: developing industry over decades, all these independent labels before this
Speaker 1: ultimate growth and consolidation to what degreed does having skin
Speaker 1: in the game affect employees and success.
Speaker 2: I have no idea what share Walter Yetnikov had in
Speaker 2: the game. I don't think that's what he thought of
Speaker 2: on any given day. I don't think that the people
Speaker 2: who I've met and have known in the music business
Speaker 2: were thinking about it strategically. I think they had a job.
Speaker 2: They loved, and I think they had interactions, sometimes bullying people,
Speaker 2: sometimes stealing from people, sometimes taking credit for other people's work,
Speaker 2: that every day was more fun than the next while
Speaker 2: they were doing it. Some of them got really wealthy,
Speaker 2: but I don't think that's what drove them. So what's
Speaker 2: missing for me when you bring in the nbas and
Speaker 2: you say, here are the spreadsheets and here's the balance sheet,
Speaker 2: go make us some more money, is if that's what
Speaker 2: you're if that's what the prize is, that's what they're
Speaker 2: going to go get. And this industry and the stories
Speaker 2: that people share with you on this podcast make it
Speaker 2: very clear this industry at some level was built by
Speaker 2: people who love the game, not by people who want
Speaker 2: to make as much money as possible.
Speaker 1: Switching gears a little bit, we talked about Bill Gates,
Speaker 1: We talked about your experience at Stanford. Right now, there's
Speaker 1: a huge discussion about whether people need to go to
Speaker 1: college or not. If you had a family friend, you know,
Speaker 1: and they had a teenage son, not a schlepper, as
Speaker 1: we put it, someone who could go to a good school,
Speaker 1: but says I have a business idea, I have to
Speaker 1: do this. What would your advice be actually.
Speaker 2: Give advice like this all the time to family friends.
Speaker 2: First of all, you got tricked too by the college
Speaker 2: industrial complex. You said good school. There's a good school
Speaker 2: and a famous school. Famous schools either have football teams
Speaker 2: or endowments, right, And it's very clear, and there's plenty
Speaker 2: of data to show this that people who get into
Speaker 2: Harvard and don't go have just as much happiness and
Speaker 2: wealth in their life as people who get into Harvard
Speaker 2: and do go. That the hard part is having the
Speaker 2: privilege and background and experience to get in, not what
Speaker 2: they did to you in class. Add to that the
Speaker 2: fact that you can take any class you want in
Speaker 2: the world for free online, maybe not at that institution,
Speaker 2: but somewhere. So what these institutions are selling are two things.
Speaker 2: One the badge accreditation proof that you got your ticket stamp,
Speaker 2: because that way you don't have to teach somebody everything
Speaker 2: you know. You can just show them this one piece
Speaker 2: of paper and they make assumptions. And the second thing
Speaker 2: is group cohesion, a group brainwashing to say, people like
Speaker 2: us do things like this, this is the way we
Speaker 2: see the world. And so for a long time, Saturday
Speaker 2: Night Live was written by people who worked on the
Speaker 2: Harvard Lampoon, and you know that's where a lot of
Speaker 2: talk show people have come, etc. Because the indoctrination of
Speaker 2: being a student at the Harvard Lampoon for all those
Speaker 2: years was actually your college experience. So now we've got
Speaker 2: this grand reshuffling, and the question is what would make
Speaker 2: you good at the future. And I don't think it's
Speaker 2: I need to start a business and make a lot
Speaker 2: of money and I can't wait four years because there's
Speaker 2: always going to be a problem worth solving. I think
Speaker 2: it's what experiences are you collecting and where are you
Speaker 2: learning these lessons? And how are you learning them? Do
Speaker 2: you have the discipline to roll that yourself? Are you
Speaker 2: willing to read a book a week every week for
Speaker 2: the next four years instead of going to college? Because
Speaker 2: if you need high school discipline to get smarter, then
Speaker 2: doing it on your own is probably going to be
Speaker 2: a mistake because you're gonna get stuck in that rut.
Speaker 2: And so what I challenge people to do is two things. One,
Speaker 2: I think almost everyone should take a gap year. They
Speaker 2: should take a year to do a hard project with
Speaker 2: some supervision, to grow up and to discover what it's
Speaker 2: like in the real world to understand that college isn't
Speaker 2: like high school, but with more binge drinking, it can
Speaker 2: be something different than that. And then the second thing
Speaker 2: is to go to the cheapest, good enough school and
Speaker 2: use the money to create experiences and a curriculum for
Speaker 2: yourself so that you learn way more, way faster than
Speaker 2: your peers. And most of those things require discipline, and
Speaker 2: unfortunately that's hard to find. But if you can do that,
Speaker 2: I think you come out ahead.
Speaker 1: Tell me about the hard project that you might do
Speaker 1: in a gap year.
Speaker 2: So a friend of the family came to me years
Speaker 2: ago and said I'd never met him. He said, my
Speaker 2: dad knows you. He said you could tell me how
Speaker 2: to get into Yale, And so I gave him ten
Speaker 2: projects you could do, and one of them was fly
Speaker 2: to India and figure out how to make enough money
Speaker 2: to get home. Now, the problem with that project is
Speaker 2: it doesn't take a year, and it's not particularly generous.
Speaker 3: But if you.
Speaker 2: Find a nonprofit that is working deep in a community
Speaker 2: to help transform that community for the better, and you
Speaker 2: commit to spending a year with them, you don't need
Speaker 2: the Peace Corps to send you somewhere. You can do
Speaker 2: that tomorrow. If you decide to start a record label,
Speaker 2: which I did years ago, you can start a record
Speaker 2: label tomorrow, run it for a year fully online, see
Speaker 2: what happens right that. If you're doing that and you
Speaker 2: know that you don't have to make money doing it,
Speaker 2: you have to make a difference doing it, you will
Speaker 2: learn an enormous amount compared to going tow NYU and
Speaker 2: taking a class in music production.
Speaker 1: You know you're talking about. Let you know, let's say
Speaker 1: I take the path where I'm not going to go
Speaker 1: to college. I read a week, I do this. I
Speaker 1: have found amongst the people I know, other than the
Speaker 1: very successful people I know who I know, no one
Speaker 1: has this level of discipline.
Speaker 2: Yeah, so where's the discipline come from? How long do
Speaker 2: you need external discipline before you'll understand internal discipline? And
Speaker 2: how can you practice it the same way you practice
Speaker 2: the trumpet? Because I think you can practice discipline for
Speaker 2: a week at a time. And so if you're asking
Speaker 2: what I would say to a sixteen year old family friend,
Speaker 2: the woman down the street who I worked with, she
Speaker 2: put on a massive climate conference for high school students
Speaker 2: in our county and over one hundred people came. She
Speaker 2: had guest speakers. She got a grant on her own
Speaker 2: from the Bloomberg Philanthropies, and she put this thing on.
Speaker 2: If I look at what she did compared to all
Speaker 2: the other students in her high school class, there's no
Speaker 2: comparison how she spent the last six weeks. She's going
Speaker 2: to remember this forever. She discovered she's not a fraud,
Speaker 2: and she's discovered all the things that don't work and
Speaker 2: some things that do. So no, don't skip college and
Speaker 2: commit to a four year thing out of the blue.
Speaker 1: But show me a one.
Speaker 2: Week project, and then a three week project, and then
Speaker 2: a five week project, and then go to a gap year.
Speaker 3: And if you have no.
Speaker 2: Self control whatsoever, yes, please go to the most famous
Speaker 2: college you can pay for. Get on the track of
Speaker 2: getting one of those scarce jobs where someone tells you.
Speaker 3: What to do.
Speaker 2: But for almost everybody else, it's this combination of generous persistence,
Speaker 2: self discipline and solving an interesting problem, because if you
Speaker 2: get good at solving interesting problems, you're never going to
Speaker 2: need to go get a job.
Speaker 1: Now. Ultra successful people, let's not talk about someone who
Speaker 1: worked their way up at Procter and Gamble and is
Speaker 1: now on their private jet people who have a more
Speaker 1: entrepreneurial path. Are they all inherently using the vernacular fucked
Speaker 1: up trying to fill some hole? Is that what drives?
Speaker 1: Are there any well adjusted? I mean, look at someone
Speaker 1: like Elon Musk, certainly a lot of success, but he's
Speaker 1: evidence seeing the issues in his personality right out in public.
Speaker 1: Does that go with the territory?
Speaker 2: I would like to leave out of the discussion the
Speaker 2: few handfuls of people who are in the media because
Speaker 2: a lack of boundaries and media attention are a very
Speaker 2: challenging problem for everybody else. And I know a lot
Speaker 2: of people who have succeeded on their own with projects
Speaker 2: as entrepreneurs. Most of them are well adjusted. There's a
Speaker 2: game being played here and they don't take it too seriously,
Speaker 2: and they see the game.
Speaker 1: And when I.
Speaker 2: Started, I took it all personally. And when you take
Speaker 2: it personally, it doesn't feel like a game. When you
Speaker 2: take it personally, you get rejected. I get eight hundred
Speaker 2: rejections in a row from New York publishers. It feels
Speaker 2: like they are rejecting you, and it takes a while
Speaker 2: to realize they don't know me. They're just rejecting what
Speaker 2: I sent them. What we have now is this weird
Speaker 2: media structure where you're supposed to be vulnerable and you're
Speaker 2: supposed to be authentic, which I think is nonsense if
Speaker 2: you're trying to strangers and then when it doesn't work,
Speaker 2: you end up in a ball on the floor instead
Speaker 2: of saying this was the move. I brought this to
Speaker 2: the world. That happened. How do I do it differently
Speaker 2: next time? And I believe that's what great musicians do,
Speaker 2: particularly jazz musicians. You watch a jazz musician and they
Speaker 2: know when they're launching into the next lick that in
Speaker 2: this setting, in this room, it's going to work. And
Speaker 2: the reason they know that is because they've done it
Speaker 2: before and they see the difference in the room between
Speaker 2: one that's going to work and one that doesn't. And
Speaker 2: that's the opportunity amidst all the chaos and mailstroam that
Speaker 2: we're in of solving interesting problems. Is you can practice
Speaker 2: without a medical degree, without a legal degree, without a
Speaker 2: business degree. You can practice human interaction and get better
Speaker 2: at it.
Speaker 1: Switching gears. Once again, there are different This is streaming
Speaker 1: television Netflick releases all episodes of the series at Once
Speaker 1: Prime used to do that sort of at this point,
Speaker 1: but the other competitors, Disney, Paramount, Apple do not. What's
Speaker 1: your insight there?
Speaker 3: Yeah, I read.
Speaker 2: You were ranting about this the other day. You and
Speaker 2: I disagree, which happens from time to time. I was
Speaker 2: talking to Ted Sarandos at Netflix. I said, Ted, I
Speaker 2: only want to ask you one question. I completely understand
Speaker 2: why you started with binging, and the reason is this.
Speaker 2: What Ted and Reid figured out how to do was
Speaker 2: use stock market money to send a signal to Hollywood
Speaker 2: and to viewers that you couldn't live without Netflix. And
Speaker 2: the way they differentiated themselves from every other way you
Speaker 2: could watch television is they weren't gonna hold TV hostage.
Speaker 2: You can have all you wanted. The only way you
Speaker 2: can do that is if you have an enormous amount
Speaker 2: of money, because you blow through one hundred million dollars
Speaker 2: TV series in a day. Right, So it was brilliant,
Speaker 2: but now they won, and once they won, it's not
Speaker 2: in their interest to keep allowing people to do this.
Speaker 2: And the reason is what they gave up was the
Speaker 2: water cooler conversation. Because if you've seen seven episodes of
Speaker 2: Lydia poet, and I've seen one. If you talk to
Speaker 2: me about it, you're going to ruin it for me.
Speaker 2: So you don't talk about it the way you would
Speaker 2: if it was on every Monday. And so I said, ted,
Speaker 2: why do you keep doing this? And it was fascinating
Speaker 2: because I thought he would have a detailed, nuanced database
Speaker 2: research answer. And he said, because that's what we do.
Speaker 2: It's been built into the culture. But I can show
Speaker 2: you the economics of it. They should stop, and I
Speaker 2: think they will because they can't keep burning shareholder money
Speaker 2: the way they were and the game theory of it
Speaker 2: doesn't make sense.
Speaker 1: Tell me more about the game theory and game theory
Speaker 1: in general in business.
Speaker 2: Okay, So game theory has nothing to do with monopoly
Speaker 2: and everything to do with understanding what people do when
Speaker 2: they each seek to maximize their benefit. So everyone understands
Speaker 2: tic tac toe, and we understand you shouldn't go in
Speaker 2: one of the side pieces, you should go in the
Speaker 2: center because that forces the other person to go certain ways.
Speaker 2: So Netflix looks at the world a lot of entrenched players,
Speaker 2: people with lots of backlists and lots of libraries, and say,
Speaker 2: we can't possibly make enough really really good shows in
Speaker 2: a very short period of time that will get people
Speaker 2: to join us for money when they could watch these
Speaker 2: other things on television for free. So what we're going
Speaker 2: to do is play a game they can't play. And
Speaker 2: this is the key to strategy, playing a game your
Speaker 2: competitors can't or won't play. And the game they could
Speaker 2: play is they could sell more stock anytime they wanted.
Speaker 2: They could lose as much money as they wanted as
Speaker 2: long as they were getting new subscribers. And by saying
Speaker 2: to NBC or HBO, we're going to break your cardinal rule.
Speaker 2: We're gonna take our best show and just blow it
Speaker 2: all in one day, the opposition couldn't respond because they
Speaker 2: didn't have enough money or inventory to catch up to
Speaker 2: that game. So they redefine the game the same way.
Speaker 2: When you look at Hotmail, which revolutionized viral marketing, everybody
Speaker 2: else was charging for email accounts. Hotmail built a company
Speaker 2: that was structured so they could give it away for free.
Speaker 2: By making that move, they undid the game that everyone
Speaker 2: else had no choice but to play. So what we
Speaker 2: you know? And when Rick Rubin leaned into hip hop,
Speaker 2: he was making the bet that the big guys weren't
Speaker 2: willing to go where he was going to go, and
Speaker 2: he was right. It took them a very long time
Speaker 2: for the people who were running those labels to get
Speaker 2: comfortable bringing out the music he was bringing out because
Speaker 2: of their upbringing compared to his moment in time. So again,
Speaker 2: what we're seeking to do with game theory is understand
Speaker 2: the rules of the game and then make moves that
Speaker 2: either box out the other people or moves that they
Speaker 2: are unwilling to make.
Speaker 1: Okay, staying on streaming television, Apple uses the old model
Speaker 1: of an episode a week, right, financial disaster. Okay, Now
Speaker 1: they're leaving intentionally certain low hanging exploitative fruit on the ground.
Speaker 1: It's like they won't just do something with titillation, nudity.
Speaker 1: Whatever they do these high cost productions, there is no catalog,
Speaker 1: no backlist like Netflix licenses or now actually owns. Sir,
Speaker 1: what would you tell Apple?
Speaker 2: Okay, So let's be clear. Apple TV does not exist
Speaker 2: to make a profit, and if you are looking at
Speaker 2: it through the lens of making a profit, it would
Speaker 2: it seems like a mystery. Apple TV exists to be
Speaker 2: a branded arm of a luxury goods company. Apple is
Speaker 2: the most successful luxury goods company of all time. You
Speaker 2: can buy a phone that does almost everything an iPhone
Speaker 2: does for a lot less money. The one thing it
Speaker 2: doesn't do is give you the blue bubble and the
Speaker 2: Apple logo, and so that is supported by the halo
Speaker 2: of something like Apple TV. So what Apple needs to
Speaker 2: keep doing is create this reality distortion field around the
Speaker 2: value of what they make and sell people identity.
Speaker 1: Staying with Apple for a second, Steve Jobs famously did
Speaker 1: no market research. What's your view on market research? Well,
Speaker 1: Steve did a lot of market research. What he didn't
Speaker 1: do was pay consultants for traditional market research. What Steve
Speaker 1: did was he had an intuitive understanding of the needs, desires,
Speaker 1: and identity of the people who would propel his thing forward,
Speaker 1: and he played it like a violin. He totally understood
Speaker 1: status roles and how to turn this thing that was
Speaker 1: for geeks into a luxury good. Most market research, most
Speaker 1: focus groups exist to make the committee happy. They don't
Speaker 1: exist to lead to hard decisions, and corporations are organizations
Speaker 1: that stick around for a while, and there's a lot
Speaker 1: of soft tissue in between the various people and market
Speaker 1: research can be used as a tool a lever to
Speaker 1: help people empower stay in power, but it is not
Speaker 1: often used to help them make better decisions. Okay, on
Speaker 1: the same point here with making decisions. Ultimately, let me
Speaker 1: put it down. A mature business, Okay, skiing. Skiing in
Speaker 1: the sixties, it was a middle class sport. Everybody did it. Okay.
Speaker 1: Starting in the late eighties they put in these high
Speaker 1: speed lists, which costs a lot of money, improve the experience. Okay.
Speaker 1: Now there's been consolidation. There's two major companies which actually
Speaker 1: are spreading from the United States to internationally. Now a
Speaker 1: there's a perception problem because skiing is never been cheaper
Speaker 1: to actually do, never mind the number of lodging and food,
Speaker 1: et cetera. But it's a mature business. Where does a
Speaker 1: mature business go from here? They're not Sierra Club. You
Speaker 1: can't build more ski areas, concert promotion. We have Live
Speaker 1: Nation in aeg Okay, used to be the land of renegades.
Speaker 1: When you have a mature business, what happens next?
Speaker 2: So, uh, your rant on this with Zach Cune was brilliant.
Speaker 2: I loved listening to it.
Speaker 3: Zach.
Speaker 2: I don't know if he told you it was my
Speaker 2: next door neighbor, so I watched him grow up. He
Speaker 2: doesn't live in New York anymore, but skiing is, and
Speaker 2: I did it for a very long time until I
Speaker 2: directed both my shoulders. Skiing is clearly a mature industry,
Speaker 2: but it's also a luxury good. It's a luxury good
Speaker 2: because it costs way more for the actual athletic moments
Speaker 2: of it then it's worth. What you're paying for is
Speaker 2: the way it feels to go, the way it feels
Speaker 2: to talk about it, the way it feels to put
Speaker 2: on the equipment, the way it feels to be in
Speaker 2: the lodge. That is what is actually for sale. The
Speaker 2: data I saw a few years ago is that the
Speaker 2: typical visitor to Veil was on the slopes for less
Speaker 2: than forty five minutes a day. Because that's just a
Speaker 2: tiny part of what is for sale the nation skiing
Speaker 2: I went. I grew up skiing at Kissing Bridge in Buffalo,
Speaker 2: which is basically a big hill, and you could do
Speaker 2: thirteen runs in an hour. And so the people who
Speaker 2: went there to ski, they were skiing, they weren't partaking
Speaker 2: in the luxury lifestyle of skiing. So what to be done, well,
Speaker 2: what's always done with an end of cycle. Stable businesses
Speaker 2: is you raise the price for the people who are
Speaker 2: committed to going. It is really, really difficult to capture
Speaker 2: the next generation because you don't have the network effect,
Speaker 2: the viral connection that causes the next generation to come
Speaker 2: in the numbers. You need them to come to keep
Speaker 2: the business going on in the way you wanted it
Speaker 2: to go, the same way if you had you know,
Speaker 2: whether it's Georgia or Armani or Heart Shaftner and Marx
Speaker 2: hart Schafter in Marx doesn't have a prayer of capturing
Speaker 2: people who are twenty years old. People are twenty years
Speaker 2: old are never gonna wear three piece suits. It's not
Speaker 2: coming back. And so what I think it's worth embracing
Speaker 2: is Schumpeter's creative destruction. There's nothing that says this particular
Speaker 2: corporation is entitled to last. And the half life of
Speaker 2: American corporations keeps getting shorter because people stick around, but
Speaker 2: brands and corporate entities they're designed to be disposable.
Speaker 1: Well, staying on that same point, antitrust, I have a
Speaker 1: friend who is a liberal who does not believe in
Speaker 1: the antitrust enforcement, believing that the marketplace will always ultimately
Speaker 1: come into competition.
Speaker 3: He is.
Speaker 1: Example would be I'm gonna ask your take.
Speaker 3: That's why having trouble with keeping my take to myself.
Speaker 3: But go ahead, yes, no, no, I want to hear your take.
Speaker 1: Okay. He we know Google's search has now been challenged
Speaker 1: by Amazon by TikTok have by the same token. Google
Speaker 1: is being sued because they have monopoly on advertising. What
Speaker 1: is your belief in the anti trust and monopoly?
Speaker 3: Okay?
Speaker 2: So we begin with Adam Smith, who I think everyone
Speaker 2: can agree is the known father of capitalism. He has
Speaker 2: many lines that say the biggest defect in capitalism is monopoly.
Speaker 2: Monopoly is broken capitalism. And the reason is simple because
Speaker 2: once a company gets to a certain scale, the single
Speaker 2: most profitable thing they can do is create the conditions
Speaker 2: to have no competition, to lock people in. And if
Speaker 2: they do that again, the math is super easy to show.
Speaker 2: The consumers do not benefit that it harms everyone involved.
Speaker 2: And so what we need is what Coreydoctor calls adversarial interoperability.
Speaker 2: Adversarial interoperability says, go ahead, get as big as you want,
Speaker 2: but you must build doorways so that competitors can play
Speaker 2: in a way that gives customers a choice, because the market,
Speaker 2: when it works, is about giving customers a choice. Now,
Speaker 2: what ended up happening here when antitrust began to get
Speaker 2: corrupted in the seventies and the eighties is simple. Milton
Speaker 2: Friedman plus others started trying to persuade us that the
Speaker 2: purpose of our culture is to enable capitalism. They got
Speaker 2: it backwards. The purpose of capitalism is to enable our culture.
Speaker 2: And as long as the market is actually free, where
Speaker 2: people can make a choice, that is more likely to happen.
Speaker 2: But when monopolists are unfettered and can lock people in
Speaker 2: their choices, go away, and nobody benefits except the monopolist,
Speaker 2: and in the long run, the monopolist doesn't do as
Speaker 2: well either. If Microsoft had agreed to be broken up
Speaker 2: all those years ago, or IBM, both those companies would
Speaker 2: be doing better today than if they had fought as
Speaker 2: hard as they did to stay.
Speaker 1: Together, giving IBM just staying with Microsoft. What would Microsoft
Speaker 1: look like today if you've been broken out?
Speaker 2: So Microsoft got in trouble and I was a victim
Speaker 2: of one of their hijinks years and years ago, because
Speaker 2: they owned the operating system, they owned the web browser,
Speaker 2: they owned the software stack, and they kept feeding them
Speaker 2: one into the other into the other. So for example,
Speaker 2: you click on a link in word and you had
Speaker 2: no choice but to have Internet Explorer to be able
Speaker 2: to look at what it had. So you can seeeople
Speaker 2: would suffer because there's no incentive to make a better
Speaker 2: web browser if the it doesn't hook up right. And
Speaker 2: if the shareholders end up with each one of the platforms,
Speaker 2: then the amount of value that's produced for consumers goes up.
Speaker 2: And when the amount of value that's produced goes up,
Speaker 2: each one of those companies, even if they're not going
Speaker 2: to have one hundred percent share, will end up being
Speaker 2: more resilient and do better over time. And so when
Speaker 2: they broke up at and T and built the baby Bells,
Speaker 2: I think, I mean, we didn't have mobile phones. Fax
Speaker 2: machines were pain in the neck. Think about the explosion
Speaker 2: in what we could do with telecommunications once different companies
Speaker 2: could play in a different way. And so instead of
Speaker 2: spending all that time and money having an existential fight
Speaker 2: about breaking up, if they said, all right, we're going
Speaker 2: to build the breast browser in the world, and now
Speaker 2: it's going to work with every word processor, and we're
Speaker 2: going to build the best software stack in the world,
Speaker 2: but now it's going to work with every operating system
Speaker 2: and on and on and on. They would have ended
Speaker 2: up way ahead of the game. And that's that's largely
Speaker 2: what they're trying to do.
Speaker 1: Now, let's be very specific with Google, which has almost
Speaker 1: all the market share and conventional search. Yeah, what would
Speaker 1: be the best solution there for everybody?
Speaker 2: Okay, So I built a company to raise money for
Speaker 2: charity called squid Doo before social media really caught on.
Speaker 2: We were the fortieth biggest website in the entire country.
Speaker 2: I had eight employees. There were three hundred thousand people
Speaker 2: building websites. Most of the money they were value they
Speaker 2: were creating was going to charity, and again we were fortieth.
Speaker 2: One day, Google did the math and realized that we
Speaker 2: were sending a lot of traffic to Amazon, and Amazon
Speaker 2: if they were getting traffic from us, wouldn't have to
Speaker 2: pay Google as their largest advertiser for promotion. So our
Speaker 2: traffic in one day went from being the fortieth biggest
Speaker 2: website in the world to forty millionth They turned.
Speaker 3: Us off just like that, flip the switch.
Speaker 2: So even though it hurt me, in three hundred thousand
Speaker 2: other people. That's not my point. My point is when
Speaker 2: you have one person who has the switch, they can't
Speaker 2: help it as a public company, but to keep flipping it,
Speaker 2: to keep pushing. So you may remember the old days
Speaker 2: of Google, the homepage would have maybe one ad on it,
Speaker 2: maybe a few on the side, and now there's almost
Speaker 2: no links whatsoever because they said to the people in
Speaker 2: the ad business, make as much money as you can
Speaker 2: by any means necessary. So this doesn't help consumers. It
Speaker 2: also doesn't really help advertisers, and it doesn't help the
Speaker 2: ecosystem that's being built. So there are lots of suggestions
Speaker 2: as to how a company like this could work. But
Speaker 2: imagine the following. You've got Google, the search core, which
Speaker 2: likes this is itself to anybody who wants to start
Speaker 2: an ad network, and you've got all these different ad
Speaker 2: networks that work together with different search engines and different
Speaker 2: interfaces to create different experiences for different kinds of users.
Speaker 2: The end result would be the market would decide which
Speaker 2: kind of interface and experience they wanted when they were searching,
Speaker 2: and the ones that weren't serving their consumers well would
Speaker 2: fade away. Advertisers would want to pay extra to go
Speaker 2: to places that work better for them and the consumers, etc.
Speaker 2: It wouldn't be one organization saying how do we make
Speaker 2: this quarter's numbers? It would instead be an ecosystem of solutions.
Speaker 2: And I was at Yahoo when Yahoo tried to be
Speaker 2: the monopoly that Google is today, and it's really toxic
Speaker 2: in the end because you have to make compromises that
Speaker 2: you're not proud of.
Speaker 1: Okay, just taking me with the ads, The user experience
Speaker 1: on Amazon is terrible. Now you can't find what you're
Speaker 1: looking for. Is their room for a competitor? What advice
Speaker 1: would you give to Amazon itself? Right?
Speaker 2: So Amazon only makes a little bit of their money
Speaker 2: by selling things like books, and they make billions of
Speaker 2: dollars selling the ads. So how does this work?
Speaker 1: Well?
Speaker 2: For many products, the only way that you're going to
Speaker 2: get any clicks at all is by buying ads because
Speaker 2: that's what people see. So how do you pay for
Speaker 2: the ads? Well, Amazon has a policy that you have
Speaker 2: to offer the lowest price you offer anywhere on Amazon.
Speaker 2: So instead these companies raise their price on other sites
Speaker 2: to make enough money to have their ads run on Amazon,
Speaker 2: which means that Amazon becomes more attractive to consumers because
Speaker 2: the price of the thing everywhere else is higher. So
Speaker 2: this is a death spiral that doesn't help anybody except Amazon.
Speaker 2: And their thesis would be, well, if it's legal, we
Speaker 2: can do it. And community action is the spirit of
Speaker 2: saying yeah, but we're the community and we are coming
Speaker 2: together saying you can't do that anymore. And Amazon is
Speaker 2: filled with some very smart people who can solve problems
Speaker 2: when you give them constraints. And so there are plenty
Speaker 2: of constraints. I can imagine where you can say there
Speaker 2: are different ways that the algorithm can be used, different
Speaker 2: sorts that could be available, different kinds of experiences you
Speaker 2: can have. And there's a warehouse company that knows how
Speaker 2: to ship stuff, and there's a website company that knows
Speaker 2: how to run things on the web.
Speaker 3: But having it.
Speaker 2: All in one place with a tiny group deciding what
Speaker 2: will make them the most money this week, I don't
Speaker 2: see any data that says that's good for all of us.
Speaker 2: It's not. It's not good for any of us except
Speaker 2: the people who need to make the stock price go up.
Speaker 1: Okay, so at one point, if one forgetting the changes
Speaker 1: in government we have Leni Khan now won't enter in
Speaker 1: the new administration. At what point do you say you're
Speaker 1: a monopoly and we should take action? What is the trigger?
Speaker 2: Okay, so I need to reiterate I am not an
Speaker 2: expert in any of this. I know people who are,
Speaker 2: but people who are conservative should and many of them
Speaker 2: are opposed to monopoly power because it's the opposite of
Speaker 2: this idea of small markets and people taking responsibility for
Speaker 2: what they do. And Robert Work and others worked very
Speaker 2: hard to change the definition of what made something a monopoly.
Speaker 2: In the old days, the definition was, by definition, if
Speaker 2: you control a big chunk of something limiting people's choice,
Speaker 2: you're a monopoly. The new definition eventually became, if prices
Speaker 2: are going up, consumers aren't benefiting, now we're going to
Speaker 2: take action. That's not the reason it's not valid is
Speaker 2: prices for some people might go down, but you still
Speaker 2: have all of the hard to measure effects that come
Speaker 2: from a lack of choice. So it is harder today,
Speaker 2: for example, to somebody, for somebody to build a business
Speaker 2: online unless they're going to get an unreasonable amount of
Speaker 2: traffic from Google, so people don't even try, right, It
Speaker 2: is hard today for someone to build an alternative to
Speaker 2: YouTube because they know that it's so deeply ingrained in
Speaker 2: the Google infrastructure that they're never going to get the
Speaker 2: traffic that they need, so they don't try. And what
Speaker 2: we're looking for in a civilized, industrialized world is the
Speaker 2: churn that comes from these innovations. Patents aren't the answer,
Speaker 2: Monopoly power isn't the answer. The answer is people solving
Speaker 2: other people's problems and getting paid for it. And you know,
Speaker 2: we saw what would happen when someone tried to corner
Speaker 2: the market in music. They try every few years. It
Speaker 2: doesn't help anybody except for the person who's trying to
Speaker 2: corner the market.
Speaker 1: Well, staying in music, we have the government suing for
Speaker 1: a breakup in Live Nation and ticket Master. Now, if
Speaker 1: you use the definition of pricing, it will not affect
Speaker 1: price whatsoever. The government's position in the modern era would be, well,
Speaker 1: if you divide them up, it will stimulate innovation. What
Speaker 1: is your thought there?
Speaker 2: Yeah, So the scalping thing is this fascinating understanding of
Speaker 2: supply and demand. And back to this idea of monopoly
Speaker 2: that when only one person is allowed to sell the tickets,
Speaker 2: you have this interesting dilemma that they have. So I
Speaker 2: talked to Bill Graham when he came to Stanford in
Speaker 2: nineteen eighty three, and I was like this young whipper snapper,
Speaker 2: and I raised my hand and he says, what do
Speaker 2: you got? And I said, but you got Springsteen coming
Speaker 2: to San Francisco. You're only charging eighteen dollars a ticket.
Speaker 2: Why are you leaving so much money on the table.
Speaker 2: You could get a hundred, and he said, because I
Speaker 2: book all the concerts in San Francisco. And yeah, I
Speaker 2: could get a hundred for Bruce, but then my customers
Speaker 2: would be out of money by the time we got
Speaker 2: to March. So I'm taking this long view, and I've
Speaker 2: remembered that for a long time, because you're right, when
Speaker 2: you write about the scalpers, someone is gonna charge extra.
Speaker 2: It's this whole lottery mindset doesn't make any sense. But
Speaker 2: that's I don't think at the heart of why you
Speaker 2: want to think about monopoly power with someone like Live
Speaker 2: Nation and Ticketmaster. You're correct, it's not how to get
Speaker 2: rid of the problem of scalpers, even though it makes
Speaker 2: good sense politically to go after it. When you've got
Speaker 2: young people who are obsessed, who are insensed because they
Speaker 2: have to pay so much. I think what we're talking
Speaker 2: about here is what kind of choices and innovations will
Speaker 2: come from those choices when people who are behind the
Speaker 2: scenes here have a choice when they play folks against
Speaker 2: each other. Would Ticketmaster have to lean harder into its
Speaker 2: technology stack to come up with innovative ways to deal
Speaker 2: with scalping if there was someone breathing down their neck?
Speaker 2: And I think history would say yes they would. And
Speaker 2: when you've locked up all the useful venues and contractually
Speaker 2: people can't compete with you, I don't see how that
Speaker 2: comes out in favor of the artists or the fans.
Speaker 1: Staying on the same subject of the touring, one of
Speaker 1: the reasons we have this gap and all this problem
Speaker 1: is the acts believe that if they charge what the
Speaker 1: ticket is worth, they will be perceived in a negative
Speaker 1: way by the fan. What would you tell the act?
Speaker 3: Okay?
Speaker 2: So the principle of permission marketing is delivering anticipated, personal
Speaker 2: and relevant messages that people who want to get them.
Speaker 3: Is the future.
Speaker 2: A lot of what people are interpreting when it comes
Speaker 2: to this ticketing thing is that the artist has no
Speaker 2: understanding of who the fan is. That I gave a
Speaker 2: talk at Columbia Records a few years ago and I
Speaker 2: held up a Dylan album from sixty five and at
Speaker 2: the back it said you could write to Bob at
Speaker 2: this address. They threw all the letters in the trash.
Speaker 2: Of course they did, what were they going to do
Speaker 2: with them? But now artists can directly connect to fans.
Speaker 2: If you can imagine a scenario where fans that are
Speaker 2: connected to the artists for the long haul and demonstrate it,
Speaker 2: get tickets at a price that makes sense for them,
Speaker 2: you have differentiated the audience. If some of them want
Speaker 2: to turn around and scalp it, well they got a
Speaker 2: prize for being a fan for a long time. But
Speaker 2: most of them won't, and so you will end up
Speaker 2: with the right people in the room who know that
Speaker 2: the ticket was worth a lot because someone offered them
Speaker 2: a bunch of money on their way in. That builds
Speaker 2: your fan base for the long haul. But what I'm
Speaker 2: trying to highlight here is there's a technology thing that's
Speaker 2: new that's missing from the old way of thinking about it,
Speaker 2: which is, instead of finding fans for my music, let
Speaker 2: me find music for my fans. And if a fan
Speaker 2: can demonstrate that they're really a fan and I can
Speaker 2: take them on that journey that benefits all of us.
Speaker 2: And so I don't know practically how I would do it,
Speaker 2: particularly for up and coming groups, but I would imagine
Speaker 2: it would be something like, there's a talking heads to
Speaker 2: our coming dire straits is going to open for them.
Speaker 2: As a result, they get to piggyback along on that
Speaker 2: attention and that trust, and so the artists become more
Speaker 2: of a kingmaker because their taste extends and their circles
Speaker 2: grow again. We've taken out the selfish middleman and flattened
Speaker 2: it a little bit. But I'm making all this up.
Speaker 1: I don't know, Okay, going something more in your air
Speaker 1: of expertise. Clayton Christensen, who's no longer with us, wrote
Speaker 1: the book Innovator's Dilemma, which was about disrupting yourself before
Speaker 1: you are disrupted. Now, just staying this a little inside baseball,
Speaker 1: there was professor at Harvard said, there's no such thing
Speaker 1: really as disruption. So what's your take on all of this?
Speaker 2: He said, there's no such thing as disruption?
Speaker 1: She went. He said, yes, I believe that's the woman,
Speaker 1: But I don't want to saying that. If you look
Speaker 1: back at history, all these companies that they said were
Speaker 1: disrupted ultimately one in the end. Let's leave that aside. Okay,
Speaker 1: let's talk about Clayton Christensen. Do you believe his philosophy
Speaker 1: was correct?
Speaker 2: Western Union had the chance to buy AT and T
Speaker 2: and they didn't. They made better telegrams instead. And I
Speaker 2: was at Yahoo when they had the chance to buy
Speaker 2: Google for ten million dollars and they didn't. The reason
Speaker 2: there's this challenge is that innovations at first always suck,
Speaker 2: and compared to the polished, perfect and profitable thing you've
Speaker 2: already got, it's very hard to say, oh, no, no,
Speaker 2: we're going to do that. It's very hard for GM
Speaker 2: to say we're going to make the first generation of
Speaker 2: electric cars because it doesn't match their culture, it doesn't
Speaker 2: match their strategy, and so you end up going to
Speaker 2: all these meetings where you have to justify it. It
Speaker 2: gets dumbed down, averaged out, and someone else with less
Speaker 2: to lose goes ahead and does it instead of you.
Speaker 2: And this challenge happens over and over and over again,
Speaker 2: and being willing to start with it in a way
Speaker 2: that makes the powerful people uncomfortable is very tricky. So
Speaker 2: another Netflix story, so Ted and Reid decide after they've
Speaker 2: beaten Blockbuster that the only threat that Netflix has for
Speaker 2: the near future is streaming because Netflix is making all
Speaker 2: those DVDs in the red envelopes they want, but someone
Speaker 2: they believe is going to come up with a streaming
Speaker 2: solution and wipe them out. So they decide they're going
Speaker 2: to do it. And this is a classic innovator's dilemma
Speaker 2: problem because remember DVDs, they're perfect, the video is really
Speaker 2: high quality, the technology has all worked out. They know
Speaker 2: exactly what to do. They're buying them from the studios
Speaker 2: and they're making a fortune. So Ted and Reid start
Speaker 2: this project. And the first rule is this. No one
Speaker 2: in the DVD division at Netflix, which accounts for one
Speaker 2: hundred percent of their profit, no one is allowed from
Speaker 2: that division to come to the meetings.
Speaker 3: Think about that.
Speaker 2: That's when Netflix became Netflix. That was an act of
Speaker 2: brilliance because they knew that the DVD people were in
Speaker 2: the room. They'd have to average it out, dumb it down,
Speaker 2: keep it small, and they yeah, it doesn't look as
Speaker 2: good as a DVD, and we're not gonna make as
Speaker 2: much money as a DVD. But they didn't have to
Speaker 2: have those meetings because they weren't involved.
Speaker 1: Well, staying on that same point point is one would
Speaker 1: remember the transition. They announced that they were streaming company.
Speaker 1: They were ahead of the consumer. The consumer revolted, then
Speaker 1: they blinked, then they went back to streaming. If you
Speaker 1: are a company, you know, I look at streaming music.
Speaker 1: Streaming Music when it launched in America was way ahead
Speaker 1: forgetting Rhapsody before, but Spotify, which really changed the game.
Speaker 1: It was ahead of what the public wanted. So to
Speaker 1: what degree do you consider the public? To what degree
Speaker 1: do you plan to get the public in your hand?
Speaker 1: What are your thoughts on that?
Speaker 2: Which public? Which public? Is the key to all of
Speaker 2: these things. So I got online in nineteen seventy six.
Speaker 2: I was Prodigy's first contractor in the nineteen eighties, and
Speaker 2: I showed Prodigy to people and they said, that's stupid,
Speaker 2: that'll never work. And if Prodigy hadn't shan changed, that's correct,
Speaker 2: it never would have worked. But which people? There were
Speaker 2: some people who said this is for me, and I'm
Speaker 2: going to tell other people, particularly as it grows, because
Speaker 2: what you're not trying to solve is what's the expression
Speaker 2: of the solution. You're trying to identify what's the insatiable
Speaker 2: whole the project, the problem that I can begin to
Speaker 2: solve for customers. If I can begin to solve it,
Speaker 2: I get traction, and customer traction is the key. If
Speaker 2: you're an A and R person, what you want to
Speaker 2: know is the fans of this band. How often do
Speaker 2: they come back? Not how many fans do they have,
Speaker 2: how often do they come back, and who do they
Speaker 2: bring with them? Because if the answer is they don't
Speaker 2: come back and they don't bring anyone with them, it's
Speaker 2: a stiff. But even if they only have a thousand fans,
Speaker 2: but they can't stop showing up and talking about it,
Speaker 2: Now you have something that's in an innovation.
Speaker 1: Okay, when did you decide that you were going to
Speaker 1: blog every day?
Speaker 2: So I started blogging on a platform before this one
Speaker 2: and before that one in the nineteen nineties or just
Speaker 2: around two thousand and It was just a way of
Speaker 2: telling the skeptical people I was related to that I
Speaker 2: wasn't doing nothing all day. It was just like an
Speaker 2: update as to what was going on.
Speaker 1: Wait, let's slow down, my Literally, the skeptical people you
Speaker 1: were related to, meaning you were family, were they down
Speaker 1: on you because it was a dip in your career,
Speaker 1: or they couldn't understand the whole world of the internet.
Speaker 1: What was going on?
Speaker 2: Yeah, I mean it began as an email newsletter in
Speaker 2: the nineties. It was I had no no, no, what
Speaker 2: was going on in your family? No, I'm getting driven right, Okay, okay.
Speaker 2: I hadn't sold my company. It was struggle. I didn't
Speaker 2: have a job with a name, and there were plenty
Speaker 2: of people who were.
Speaker 3: Like, what do you do?
Speaker 2: So I could write these letters. These not that different
Speaker 2: than I left this letter to people saying is this
Speaker 2: I tried this, this didn't work, blah blah blah. And
Speaker 2: then sometimes I was Once I had this new platform,
Speaker 2: I was doing it two or three times a day,
Speaker 2: and I discovered that there was a voice that sounded
Speaker 2: like my blog voice. The first one hundred posts, I
Speaker 2: probably only had two that sounded like me. If you
Speaker 2: go back and you look at the one on my
Speaker 2: visit to the Apple Store, that's the one where I thought, oh,
Speaker 2: I sound like this now on my blog. And what
Speaker 2: I didn't want to do was regularly decide if a
Speaker 2: blog post was good enough to post. So I made
Speaker 2: the decision once that there's gonna be a blog post
Speaker 2: tomorrow now because it's my best but because it's tomorrow.
Speaker 2: And once I made that decision once, oh, it was
Speaker 2: so great because then all day you're imagining what are
Speaker 2: you going to do for tomorrow's post because there's going
Speaker 2: to be a post, and having that hole to fill
Speaker 2: transform my writing, and it transformed the ability I had
Speaker 2: to have a conversation in front of people.
Speaker 1: But that can be a burden. You can wake up
Speaker 1: and you can say, well, I got to have something
Speaker 1: for tomorrow. If I knock it off at ten am,
Speaker 1: I'm free for the rest of the day. If it's
Speaker 1: eight pm and I haven't written anything yet, what am
Speaker 1: I going to do?
Speaker 3: Yeah?
Speaker 2: And so that burden is called work, and that's what
Speaker 2: I wanted was to sign up for it. I needed
Speaker 2: a hack once I got to a thousand, because when
Speaker 2: they got to a thousand and I went, oh, I
Speaker 2: have a streak here. Now I'm up to almost ten thousand.
Speaker 2: I have a streak here. I don't want to get
Speaker 2: the flu and blow my streak. So I figure out
Speaker 2: how to queum up. So now I can take a
Speaker 2: day or two. Often there's still going to be a
Speaker 2: post tomorrow. But what I do is every night before
Speaker 2: I go to bed, I read tomorrow's post. At about
Speaker 2: one out of five times, I delete it and just
Speaker 2: write a whole new thing.
Speaker 1: Okay, how do you feel about repeating concepts and ideas?
Speaker 2: If I'm not doing that, I'm making a mistake. I
Speaker 2: gotta be repeating ideas and concepts.
Speaker 3: This is not.
Speaker 2: A demonstration of how creative I am. This is me
Speaker 2: Teaching and pedagogy is about repetition, consistency, frequency, and helping
Speaker 2: people like My best blog posts are very simple. My
Speaker 2: best blog posts are I tell you something you already
Speaker 2: know in a way that makes it easy for you
Speaker 2: to tell your friends.
Speaker 3: That's what I'm trying to do.
Speaker 1: But every once in a while, I mean, I have
Speaker 1: still have bookmarked your original permission marketing post, and you
Speaker 1: wrote one a couple of weeks ago that I wrote
Speaker 1: about that really made a huge impact. What is it
Speaker 1: like when you do this is something I don't know.
Speaker 1: Maybe you'll agree with me, maybe you won't. When you
Speaker 1: do something that's in eleven, you know you've been doing
Speaker 1: it so long you're never gonna write something terrible. But
Speaker 1: every once in a while, you write something transcend, it's
Speaker 1: the nature of doing it. Does it bother you that
Speaker 1: you sort of can only do it once. If you're
Speaker 1: a musician, if you write a hit song, you go
Speaker 1: on the road for forty years and play that song. Okay,
Speaker 1: do you ever feel I wrote it? It was great,
Speaker 1: and now tomorrow it's another thing?
Speaker 2: You know, Bob, There's two answers to this. The first
Speaker 2: part is I will write an eleven and no one
Speaker 2: else will know.
Speaker 3: That.
Speaker 2: I have no clue which posts people.
Speaker 3: Are gonna love.
Speaker 1: None.
Speaker 2: And the second one is when I do write something
Speaker 2: that resonates, I don't forget it. It shows up on podcasts,
Speaker 2: it shows up when I'm on stage, it shows up
Speaker 2: in a book, And so I'm you know, no, I
Speaker 2: don't get to play free Bird all the time. But
Speaker 2: I also don't have the problem of having to play
Speaker 2: free Bird all the time. But I have riffs that
Speaker 2: become the fabric of the foundational thing I'm talking about,
Speaker 2: And when I'm on stage and I know, I get
Speaker 2: to bring up the next one because I don't have
Speaker 2: a script. When I bring it, I'm like, oh, this
Speaker 2: is great. And every once in a while it'll stop
Speaker 2: working and oh I love that one. It's gone now,
Speaker 2: So there's that. But I disagree. I don't know when
Speaker 2: I write an eleven, I.
Speaker 1: Wrote, okay, to what degree does feedback affect you?
Speaker 2: So there's no comments on my blog There used to
Speaker 2: be comments. What I found was within a week I
Speaker 2: was writing differently because I was anticipating the comments and
Speaker 2: writing to avoid that criticism. Whatever I thought would happen,
Speaker 2: and my writing went to shit. And so I said,
Speaker 2: I'm not gonna have true choices. I can either have
Speaker 2: a blog with comments and no blog posts or a
Speaker 2: blog with blog posts and no comments. And I went
Speaker 2: with blog posts. And I don't regret it one bit.
Speaker 2: I don't know how you do what you do. It's
Speaker 2: a miracle. You and I are completely different in this respect.
Speaker 2: And then Amazon reviews, A one star review from an
Speaker 2: anonymous person who didn't get the joke would really unsettle me,
Speaker 2: because a one star review doesn't mean it I didn't
Speaker 2: do a good job. It means it wasn't for them,
Speaker 2: and I haven't learned anything from that. So I stopped
Speaker 2: reading my one star reviews. But if you didn't do that,
Speaker 2: you have to stop reading your five star reviews. So
Speaker 2: I haven't read an Amazon review in seven or ten
Speaker 2: years unless someone emails it to me, which I don't want.
Speaker 3: Them to do.
Speaker 1: Okay, but you're not someone who lives in complete isolation.
Speaker 1: You're out doing gigs whatever. There are some greatest hits.
Speaker 1: I'm sure people come up to you and go, you
Speaker 1: know what you wrote about X. Yeah, I read Okay,
Speaker 1: Purple Cow, Yes, which you've been. But my point is
Speaker 1: just go because I'm interested. You don't know when you
Speaker 1: hit it way out of the park.
Speaker 2: When it's just me in my underwear, no idea. So
Speaker 2: I don't talk about evolution on stage anymore, and I
Speaker 2: hardly blog about it. I wrote a book it took
Speaker 2: me nine hours a day for a year called Survival
Speaker 2: Is Not Enough. Charles Darwin wrote the forward. I am
Speaker 2: super proud of that book. And whenever I start talking
Speaker 2: about sexual selection and mutation and all the stuff that
Speaker 2: I know a lot about crickets, just the room, just
Speaker 2: people's eyes glaze over. They do not want to go
Speaker 2: to the next level of understanding how ideas are like
Speaker 2: jeans and all that stuff. And I get talk about
Speaker 2: it all day and people don't want me to.
Speaker 3: So I don't. It's done. But when I wrote it,
Speaker 3: I was like.
Speaker 2: This is Nobel prize stuff, this is this is an eleven.
Speaker 3: Nothing.
Speaker 1: Okay, you know in my particular case, certainly when it
Speaker 1: comes to politics in the national vibe, I get that
Speaker 1: from the feedback. Having said that, I understand your concept completely.
Speaker 1: It is inhibiting getting the feedback and wrestling with that
Speaker 1: all of the time. So how do you put your
Speaker 1: finger on the pulse? How do you take the temperature?
Speaker 1: What is your input?
Speaker 2: So I mean, I'm meeting hundreds of blog posts a day,
Speaker 2: and I'm in the world and I talk to people.
Speaker 2: But here's my thesis. Most people have been indoctrinated if
Speaker 2: they see something they don't understand to just walk on by.
Speaker 2: If there's something in the world that is illogical to
Speaker 2: me that is working, but I don't think it should work.
Speaker 2: That isn't working, but I think it should work. I
Speaker 2: can't let it go. I have to sit and look
Speaker 2: and look and look until I have a thesis. And
Speaker 2: that exploration is the fuel for a lot of my work.
Speaker 2: Please explain to me how the culture ended up like.
Speaker 1: This, and before we know, what's the status of your stereo?
Speaker 2: So I built speakers and some two A three two
Speaker 2: bamps that I got that are handmade, and of course
Speaker 2: Paul McGowan built all the stack on the streaming side.
Speaker 2: But these speakers, which I painted in Evecline blue, combined
Speaker 2: with the three watt per channel amps. Just like I
Speaker 2: used to buy you speakers a new set every three
Speaker 2: to five months on audio Gone done with that, I
Speaker 2: haven't had a new set of speakers in three years.
Speaker 2: It's I was listening last night to O brother and
Speaker 2: what a genius t bone was is?
Speaker 3: They sound great? It makes me very happy.
Speaker 1: Okay, Well, in the chain the sound is affected definitively
Speaker 1: by the speaker. We can talk about everything that comes
Speaker 1: before that will colors, but every speaker inherently sounds different. Correct, Okay,
Speaker 1: So what is it about these speakers that, with all
Speaker 1: the experiences you've had, you finally decide this is the one?
Speaker 1: All right?
Speaker 2: So the most I ever spent on a pair of
Speaker 2: speakers was sixty thousand dollars. And the cool thing about
Speaker 2: Audiogon is you can buy a used pair of speakers
Speaker 2: and sell them for what you pay for them. So
Speaker 2: I've actually broken even pretty much on all of my
Speaker 2: speaker adventures. These speakers are baffleous, which means there's no box.
Speaker 2: You've got the driver, which is a hole in a
Speaker 2: big sheet of butcher block, and this the front and
Speaker 2: the back are both exposed to the outside world. And
Speaker 2: that means they're super fast because they're not pushing against
Speaker 2: the compressed air inside the box. And because they're so
Speaker 2: efficient ninety eight dB efficient, I only have to give
Speaker 2: them a little tiny bit of power. And the thing
Speaker 2: about amplification is two bamps of the fifties were better
Speaker 2: than almost any ant made today, but they couldn't get
Speaker 2: very loud because they only have a few watts per channel.
Speaker 2: So when the transistor came along, the manufacturers loved it
Speaker 2: because they could give you one hundred two hundred, four
Speaker 2: hundred wats and it only cost them four bucks. So
Speaker 2: by going backwards with the tubes, I got the chance
Speaker 2: to get that sweetness. Maybe it's not completely realistic, but
Speaker 2: it sounds so nice. So it's the bafflus, it's the
Speaker 2: high efficiency, it's the quick speed, and it's the fact
Speaker 2: that I'm in the sweet spot of what the tube
Speaker 2: can do.
Speaker 1: Okay, you built your own speakers, who designed them, who
Speaker 1: decided on the components, right, So there's only one driver,
Speaker 1: and there's no crossover, so the tweeter, the woofer, the midrange,
Speaker 1: they're all one thing. And it's two brothers in China
Speaker 1: who are audiophiles who decided to use Chinese ability to
Speaker 1: make things much cheaper than they should be, but to
Speaker 1: spend a lot to make these drivers. So the drivers
Speaker 1: cost six hundred dollars a pair, and if they were
Speaker 1: made in the US, they would probably cost twenty thousand
Speaker 1: dollars a pair. So about the six hundred dollars pair
Speaker 1: of drivers and everything else is just me screwing things together. Okay,
Speaker 1: so they're full spectrum one driver fuir spectrum. Can I
Speaker 1: ask how many inches they are across?
Speaker 3: Twelve inches?
Speaker 2: And I'm looking on my web here to tell you
Speaker 2: the name of the company because it's been a little while. Aldo, Okay,
Speaker 2: it's called Lee Song l II, And what you're looking
Speaker 2: for is, oh, they're down to three hundred and ninety
Speaker 2: nine dollars. They're the Lie Song fifteen inch full range
Speaker 2: speaker driver.
Speaker 1: And then you decided how large a piece of wood
Speaker 1: and how to installment or they get tell.
Speaker 2: You, no, I built a whole enclosure and I tried
Speaker 2: different approaches and it's not that hard because there aren't
Speaker 2: that many choices.
Speaker 1: And then what do you use for source?
Speaker 2: So I used to have a huge collection of CDs,
Speaker 2: and then for a while I got into vinyl, but
Speaker 2: I found I kept coming back to streaming using Rune,
Speaker 2: which is a piece of software that everybody who loves
Speaker 2: music should have. Are n And what Rone does is
Speaker 2: it's the interface between title and cobas as your sources
Speaker 2: and the streaming box. And it's this beautiful interface that
Speaker 2: lets you see album art and all about the album.
Speaker 2: It's really lovely. It makes listening to music more fun
Speaker 2: and it also suggests the next song I want to
Speaker 2: listen to, and it's very smart about that. It's not
Speaker 2: being used against me because I paid for it. There's
Speaker 2: no ADS, there's no nobody's getting payola. It just works.
Speaker 2: And so I've got that thing running next to a
Speaker 2: box from PS Audio, and the PS audio box is
Speaker 2: the thing that takes the Ethernet cable and turns it
Speaker 2: into an analog signal, and then that analog signal goes
Speaker 2: to an amp. Now, the thing about the amps. The
Speaker 2: amps come from a website called hi Fi Shark, which
Speaker 2: I also strongly recommend everybody. High Fi Shark is where
Speaker 2: all the people who are into this trade use stuff
Speaker 2: back and forth with each other, and it collects all
Speaker 2: of these different sites that have stuff. So you can
Speaker 2: set a search inside Hi Fi Shark that will send
Speaker 2: you an email every time one of these things comes
Speaker 2: up for sale. And so I'm looking now and I
Speaker 2: can see Bottlehead makes. There's one there, here's an audio
Speaker 2: note one that's super fancy, and I like to find
Speaker 2: the ones that are mostly hand built by hobbyists. But
Speaker 2: building at two a three am outside of my area
Speaker 2: of expertise is something that a really good hobbyist has
Speaker 2: no trouble doing.
Speaker 1: And just because you mentioned about the ads, what do
Speaker 1: you believe about Netflix adding an advertising tier?
Speaker 2: Okay, so what Netflix is trying to do now is
Speaker 2: pick up all the crumbs they might have missed first
Speaker 2: time around. And what they're going to have to do
Speaker 2: to make sure they do it in an intelligent way
Speaker 2: is cripple the ad experience enough that people can afford
Speaker 2: and want to pay for. Netflix will because they'll always
Speaker 2: make more money from that than they will from ads,
Speaker 2: and then get enough people to watch the ad part
Speaker 2: that they can get enough advertisers who will pay extra.
Speaker 2: And this is critical because bottom fishing ads the kind
Speaker 2: you see on late night TV wreck the viewing experience,
Speaker 2: which means fewer people watch them, which means that they
Speaker 2: wreck it further down.
Speaker 3: It's a race to the.
Speaker 2: Bottom where you want to super Bowl ads, where advertisers
Speaker 2: pay extra to be in front of a lot of people.
Speaker 2: So I think Netflix's plan is to keep differentiating so
Speaker 2: that people like me and maybe you will pay their
Speaker 2: twenty or thirty bucks a month and then build a
Speaker 2: big enough audience that you won't see YouTube ads, you'll
Speaker 2: see super Bowl ads on the rest.
Speaker 1: Well, if we you know, basically Netflix blinked after a
Speaker 1: bad quarter, if we we wound the tape, do you
Speaker 1: think adding an advertising tier was wise?
Speaker 2: Again, I guess it comes down to what kind of
Speaker 2: company do you want to build? And you know, as
Speaker 2: we bring this around to this where we started, if
Speaker 2: you're going to be owned by short term thinkers in
Speaker 2: the stock market, you have really dumb people as your bosses.
Speaker 2: And Netflix enjoyed this really significant and rapid rise. They're
Speaker 2: much better at something like that than I would ever be.
Speaker 2: But if you want to build a company you're proud of.
Speaker 2: I don't think you want advertisers, and I don't think
Speaker 2: you want short term owners. I think you want to
Speaker 2: be able to say we are beholden not to advertisers,
Speaker 2: but to our viewers who are paying us, and we
Speaker 2: want owners that are going to stick around so that
Speaker 2: we can build that Because the goal of a company
Speaker 2: shouldn't be to make as much money as possible for
Speaker 2: the people who own it today. It should be to
Speaker 2: do work you're proud of.
Speaker 1: And I'm proud of the wisdom you've dropped on us today, Seth.
Speaker 1: I want to thank you so much for taking this
Speaker 1: time spending it with my audience.
Speaker 2: Bob, you are such a mention. You are a national treasure.
Speaker 2: And to find someone who I like so much, who
Speaker 2: thinks so differently from me, what a treat. Thank you
Speaker 2: for having me. There's a bucket list item.
Speaker 1: Well, now you're raising a lot of questions, but that'll
Speaker 1: be another time in terms of thinking differently in any event,
Speaker 1: until next time, this is Bob Luff sets